In the past one month, the share price of Rico Auto tanked 19.30 per cent at Rs 46.20 on September 2. (PTI)

China slowdown fears coupled with tepid Q1 earning of India Inc dented market sentiments in the ongoing financial year. As a result, the BSE Sensex declined 10 per cent during April 1 and September 2. During the same period, the share price of companies like DLF, Adani Power, GMR Infrastructure, Reliance Communications, Punjab and Sind Bank hit their new all-time high.

Barring the consumer durables stocks, the ongoing financial year remained depressing for other sectoral indices on the Bombay Stock Exchange. The BSE Realty index declined the most — 27 per cent at 1,229.15, it was followed by the BSE Metal index (down 25 per cent) and the BSE Power index (down 18 per cent). However, the BSE Consumer Durables index jumped around 2 per cent in the ongoing financial year till September 2.

Interest of foreign investors appears to have not been very encouraging in recent times. Foreign institutional investors remained net sellers in the domestic equity markets as they sold shares worth Rs 10,187.70 crore during April 1 and September 2. In August, their net outflow stood at Rs 16,877.30 crore.

Kapil Bali, chief executive officer, YES Securities (India), said, “Some reasons for this have been domestic as earnings growth has disappointed but the greater factor for this is global volatility. Issues in the eurozone, slide in the Chinese markets and expectations/timing of rate hike sin the US has led foreign investors to remain cautious. However, if we look at the longer term picture, India would emerge as a preferred investment decision for not just domestic investors but also for the foreign ones.”

JM Financial in a research report said, “The full blown effects of a Chinese slowdown on global growth are still being analysed and absorbed. Hence we anticipate more bouts of volatility in coming months given that the domestic investors may not have further ability to negate a global selloff, and since domestic earnings downward revisions are likely to continue. Our strong recommendation would be to be invested in companies that have the maximum resilience on earnings in coming quarters and are beneficiaries of big market shifts.

The recent downfall in the domestic equity markets has opened doors for investors who are looking for some decent investment options after the recent slide.

Below are some of the stocks on which experts are bullish after the correction.

Rico Auto Industries: The company supplies a wide range of high precision fully machined aluminium and ferrous components and assemblies to automotive OEMs across the globe. Rico’s integrated services includes design, development, tooling, casting, machining and assembly across ferrous and aluminium products.

In the past one month, the share price of Rico Auto tanked 19.30 per cent at Rs 46.20 on September 2. During the period, it touched a high and low of Rs 60.25 and Rs 44.75, respectively. After the correction, brokerage house Sharekhan, turned bullish on the company. In a research note, it said, “The stock of Rico Auto Industries (Rico) corrected due to the weak market conditions. There is no stock specific change in business environment that would warrant a steep fall. In our note dated August 14, 2015 we had downgraded the stock from Buy to Hold largely due to the discomfort on valuations. Now, after the price correction, the stock is again attractive on valuations and hence we have upgraded the stock to Buy with an unchanged price target of Rs 58.”

YES Bank: According to Religare Institutional Research, the share price of the bank has corrected around 35 per cent from its Mar’15 peak and offers an attractive buying opportunity at current levels. Concerns over asset quality and forex borrowings are overblown. The brokerage house does not anticipate any negative surprises on NPA or credit costs. The bank has an adequate swap structure in place to cover MTM losses on forex borrowings. Margins to remain well protected at current levels and loan growth to stay much ahead of peers.

Religare believes the share price of the company can touch Rs 1,075. On September 3, YES Bank shares were trading at Rs 666 apiece on BSE.

Bajaj Finance: The share price of the company declined over 11 per cent in the past month. Sharekhan in a research note said, “We have been positive on Bajaj Finance’s business model and strong earnings performance, the valuation after the recent correction has turned more reasonable. We believe the strong growth in assets under management (AUMs), superior asset quality and return ratios should maintain premium valuations to its peers.” On September 3, the share price of Bajaj Finance was trading 2.94 per cent higher at Rs 5176.25 in the morning trade.

Wonderla Holidays: The share price of the company has corrected over 20 per cent from its 52-time high. It hit a new 52-week high on January 23 this year. After the correction, Angel Broking believes, Wonderla Holidays now poses as a good buying opportunity. The brokerage house expects the share price of the company can touch Rs 322 in coming quarters.

Over the last three years, Wonderla Resort’s occupancy rate has increased significantly from around 30 per cent to 45 per cent. Also, Wonderla Resort has turned around at the operating level in FY2015. Angel Broking said, “Increase in footfalls at the Bengaluru park is likely to further boost growth for Wonderla Resort. Moreover, occupancy rate as well as profitability to rise, going forward.”

On September 2, Wonderla Holidays shares were at Rs 274.10.

JBF Industries: JBF Industries is engaged in the manufacturing of polyester chips, partially oriented yarn and polyester processed yarn/specialty yarn at its plants at Silvasa in the Union Territory of Dadra and Nagar Haveli and at Valsad (Gujarat). The company is one of the leading names in Polyester business in India.

In the past one month the share price of the company retreated 26 per cent to Rs 223.50 on September 2. It was at Rs 304.25 on August 3.

According to KRChoksey Shares & Securities, the recent correction in the stock price of JBF industries provides an excellent opportunity to enter the stock. The equity funding by Knights (KKR) to the tune of $150 million will allay investor concerns about its debt of $1.4 billion. The company is on course to improve its debt-equity ratio from 4.7 to 2.6 by FY17 respectively. KKR will take 20 per cent stake in JBF Industries and 14.5 per cent stake in its Singapore subsidiary respectively. Fund infusion from KKR will help JBF Industries to improve its cash flow and reduce its debt requirement for its ongoing Greenfield PTA project in Mangalore.

The brokerage house believes the share price of the company can touch Rs 482, going forward.

(Disclaimer: The stocks are recommended by the respective brokerage houses and not a recommendation from Financial Express online)

In the BSE 100 index, ICICI Bank, Mahindra & Mahindra, Power Grid Corporation of India, Punjab National Bank, Bank of India, The Federal Bank, Hindalco, Steel Authority of India, State Bank of India and ACC touched their new 52-week low during the week. (Photo: PTI)

Bear hug dragged down domestic equity markets for the fourth consecutive week and to their lowest levels in over a year on weak global cues coupled with China slowdown fear and continuous selling pressure by foreign institutional investors. Key benchmark indices plunged over 4 per cent during August 28 and September 4.

The BSE Sensex lost 1,190.48 points at 25,201.90 for the week ended September 4. NSE Nifty also dipped by 346.90 point at 7,655.05 during the same period.

All the sectoral indices on the Bombay Stock Exchange closed in red in the week gone by. The BSE Power index plunged the most — 7.15 per cent at 1,729.99, it was followed by the BSE Bankex (down 6.42 per cent), BSE Auto (down 5.67 per cent), BSE Capital Goods (down 5.47 per cent) and BSE Metal (3.85 per cent).

In the 30-share Sensex, BHEL, Mahindra & Mahindra, State Bank of India, Hindalco Industries and ICICI Bank declined 11.91 per cent, 9.78 per cent, 9.71 per cent, 9.66 per cent and 9.06 per cent at Rs 206.65, Rs 1,112.20, Rs 225.05, Rs 73.85 and Rs 257.85, respectively, during the week.

Sanjeev Zarbade, vice-president, private client group research, Kotak Securities, said, “In the recent weeks, global equities have been impacted by sudden devaluation of its currency by China and signals of an economic slowdown. So far as India is concerned, the delay in passing key reforms has also contributed to the disappointment among investors.”

Vivek Gupta, CMT, director research, CapitalVia Global Research, said, “Sharp fall in the domestic equity markets were triggered by selloff in global markets and slowdown in China’s economy. Market breadth indicating the overall health of the market was very weak. Broad based selling was seen across the board.”

This week, the Cabinet approved auctioning of marginal oil and gas fields having potential of Rs 70,000 crore which will not only reprieve the domestic oil rigs, pipes and ancillary industries but the policy decision will also save valuable foreign exchange outflows.

CBDT finally issued instructions not to open prior MAT cases settling the anxiety amongst foreign institutional investors. HDFC bank took the industry by surprise by reducing the base-lending rate by 0.35 per cent, paving the way for others to follow the suit and reduce cost of borrowing for the economy.

In the BSE 100 index, ICICI Bank, Mahindra & Mahindra, Power Grid Corporation of India, Punjab National Bank, Bank of India, The Federal Bank, Hindalco, Steel Authority of India, State Bank of India and ACC touched their new 52-week low during the week.

For the further movement of domestic benchmark indices, Vijay Singhania, founder, director, Trade Smart Online, said, “Globally, investors have turned nervous following the Shemitah, the last year of a seven-year cycle in the Jewish calendar. September 2015 being another Shemitah, which ends on September 13. Shemitah in the past has brought immense financial hardships to the world. Meanwhile, global investors are facing redemption pressure in a risk-off environment. Uncertainty over the US Fed rate hike is spooking global markets and the domestic markets no exception. Further downside in Nifty cannot be ruled out in case Fed hikes rates in September.”

E-commerce firm Infibeam has received RBI approval for FII investment of up to 49%.

Simultaneously, Sebi has sought clarification from the merchant banker of the e commerce player regarding its  proposed IPO. Infibeam filed a draft red herring prospectus with the BSE and the NSE in June to raise R450 crore.
Sources said the Sebi approval should come in this month following which the company will decide on the timing of the IPO. The firm plans to utilise the proceeds to fund business expansion, meet working capital requirements and pay off debts.

Without disclosing details of clarification sought, Sebi has said it is awaiting response from the lead managers for the proposed public offer. The capital market regulator said it might issue observations on the draft offer documents within 30 days of receiving a satisfactory reply from the lead merchant banker regarding the clarification or additional information sought from them.The next update would be uploaded on the Sebi website on September 7.

Infibeam plans to invest R230 crore in making a cloud-based data centre at the Gujarat International Fin-Tec City (GIFT). Started in 2007, Infibeam runs several e-commerce services such as Infibeam.com, Indent, BuildaBazaar, Incept and Picsquare. Last year, Sony Music had bought a 26% stake in Indent. Flipkart and Snapdeal have raised massive funding rounds and Infibeam seems to be going the same way.

Infibeam operates in Ahmedabad, Delhi, Mumbai and Bangalore, and has a total of 1,300 employees. It is an online retailer for books, electronics and automobiles in India.Infibeam is valued at R1,800 crore ($283 million). Market leader, Flipkart is valued at $12 billion, while the world’s largest e-tailer Amazon has a market cap of $202 billion.

Coal India’s dispatches in August were up 8.9% y-o-y to 40.2 mt, maintaining its healthy high single-digit growth rate. Among the subsidiaries, CCL posted the strongest growth (~20%).

MCL’s growth was ~13% despite disruptions for a few days due to bandh. Dispatches were weak at ECL (down 17%) and WCL (down 2%); both produce high grade coal and are priced close to import prices.

There is a case for price correction in higher-grade (G1 to G4) coal on fall in RB Index, but the overall volumes are just 5% of the total dispatches. YTD dispatches are up 8.2% y-o-y, largely in line with our 9% growth estimate for FY16 (534 mt).

Production growth moderated to 4.8% to 36.2mt in August. Although production growth moderated because of intended destocking, the overburden removal in 1QFY16 was very strong—implying stronger production during rest of the year.

We continue to believe that CIL’s dispatches will rise at a CAGR of 10% to 781m tonne by FY20. In the 1QFY16 analyst meet, the management reiterated its focus on growing production.

CIL’s adjusted Ebitda is likely to grow at a 12.8% CAGR to R38,600 crore by FY20, largely benefiting from operating leverage, transparent pricing for non-power sector and 10% volume CAGR. Based on DCF valuation (WACC of 12.8%), we value the stock at R439— marginally lower than our earlier estimate of R450. The stock is trading at an EV of 6.6x FY17E adjusted Ebitda. Reiterate ‘buy’.