In the past 5 trading sessions, the BSE Sensex gained 5.14 per cent at 26932.88 on October 6. The benchmark index was at 25,616.84 on September 28. NSE Nifty gained 4.6 per cent during the same period. ( Express photo)

The BSE Sensex jumped 1,316 points in the past five trading sessions on the back of positive surprise from RBI, which announced a repo rate reduction by 50 basis points to 6.75 per cent, continuing the front loading of rate cuts. It also derived confidence from better fiscal deficit numbers for first five month of FY16.

In the past 5 trading sessions, the BSE Sensex gained 5.14 per cent at 26932.88 on October 6. The benchmark index was at 25,616.84 on September 28. NSE Nifty gained 4.6 per cent during the same period.

ICICI Securities in a research note said, “A rate cut by RBI supported market sentiments. Going ahead, earnings would be the key driver for market movement. From a sectoral perspective, we are positive on auto, cement and capital goods (cyclical recovery in earnings aided by lower input costs and declining interest rates will provide strong operating and financial leverage). We also have a positive outlook on the IT and pharma space (given their quality of earnings) with a negative bias on metals, infrastructure and real estate.”

On October 6, Sensex was trading around 85 points up in the late morning trade. Below are five stocks on which market experts are looking bullish in the present market scenario.

Bajaj Finance
Recommended By: JM Financial
Why Buy: After a strong 52 per cent growth in asset under management (AUM) over the past five years, JM Financial believes Bajaj Finance is setting a base for the next leg of sustainable and profitable growth by setting up wholly owned housing finance subsidiary. It has received an approval from NHB for the housing finance subsidiary. The brokerage house believe Bajaj Finance will focus on lower ticket size mortgages (ticket size of `3-4mn) through its subsidiary. On the back of this HFC subsidiary and continued strength in core business, JM Financial estimate 3-year AUM and earnings CAGR of 26 per cent and 24 per cent respectively. JM Financial has ‘buy’ rating on Bajaj Finance with target price of Rs 5,700. On October 6, Bajaj Finance was at Rs 5,156.

Inox Wind
Recommended By: Nomura
Why Buy: In the past one month, the share price of Inox Wind gained 1.10 per cent to Rs 367.20 on October 6. Sensex gained 8.19 per cent during the same period. The Japanese brokerage firm believes the share price of Inox Wind can touch Rs 497. According to Nomura, Inox Wind is well placed with India’s renewable sector at an inflection point owing to reinstated incentives for the sector and the government’s push for 75 GW of wind capacity by 2022. Inox Wind’s revenue and EBITDA will grow at CAGR of 34 per cent and 37 per cent, respectively, between FY 15-18. The company will also have positive free cash flows by FY16.

For the quarter ended June 2015, the company posted net profit of Rs 50.50 crore, up 115.08 per cent, against Rs 23.48 crore in the corresponding quarter a year ago.

Inox Wind Ltd is one of India’s leading wind power solutions providers with manufacturing plants near Ahmadabad (Gujarat) for Blades & Towers and at Una (Himachal Pradesh) for Hubs & Nacelles.

Ashiana Housing
Recommended By: Religare Capital Markets
Why Buy: Ashiana Housing plans to deliver nine projects across its major markets in 2015-16. This should lead to a surge in revenue booked upon project completion. Further, the on-time delivery of its first projects in the cities of Neemrana and Halol should help the company establish its brand there. Its reputation stands out in the real estate space. Ashiana Housing is a real estate developer with a focus on housing.

In the past one year, the share price of Ashiana Housing jumped 13.13 per cent to Rs 180.45 on October 6. Sensex gained 2.52 per cent during the same period.

Shriram Transport Finance (STFC)
Recommended by: IIFL
Why Buy: STFC has decided to merge the equipment financing subsidiary with itself. At present, the sole focus is on working out recoveries from the defaulted customers and the efforts are translating into encouraging collections. Management intends to resume asset under management growth from end 2015 but with a revamped strategy. The construction equipment industry has started to show positive signs as the prices of used equipments have improved. A pick-up in infra/industrial construction activity will aid growth and non-preforming loans. STFC is trading at historical mean valuation of 2.2x 1-year rolling forward P/ABV. On FY18 adjusted book value, the stock valuation is at undemanding 1.8x considering the anticipated strong recovery in growth and profitability. At the start of an upcycle, if an inherently robust and profitable franchise is available at mid-cycle valuation then it’s a sound case to own it. On October 6, the share price of STFC was at Rs 954.40.

Voltas
Recommended By: Motilal Oswal
Why Buy: In a 5-star-rated air conditioner, which weighs 60 kg, 24 kg of copper and 5 kg of aluminum are used. These metals, which constitute almost 50 per cent of the weight of the air conditioner, have seen sharp price declines over the last few quarters. Lower raw material prices should offset the impact of discounts on margins. Despite lower volumes, Voltas maintained its margins in the first quarter of FY16.

The brokerage house is bullish on Voltas, however it cut Voltas earnings estimates by 4 per cent for FY16 and by 3 per cent for FY17. Voltas trades 23x FY16E and 17x FY17E adjusted EPS. Motilal Oswal maintains ‘buy’ rating on Voltas stock with target price of Rs 350 (Rs 360 earlier).

There are multiple triggers for the stock, which include positive impact of the Seventh Pay Commission hikes, improving margins in the Projects business, and structural uptrend in the air conditioner market. On October 6, Voltas was at Rs 280.75.

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

Brokerage firm Motilal Oswal said that gold loan penetration levels remain low and the addressable market is very large so niche expertise and single product focus will be growth enablers for Muthoot Finance. (Photo: PTI)

Muthoot Finance shares jumped as much as 8 per cent in the morning trade on Wednesday after Motilal Oswal initiated coverage with ‘buy’ rating with a target price of Rs 234 per share.

At 10.28 am, Muthoot Finance’s shares were trading 6.70 per cent up at Rs 174.40 on BSE. On NSE, the scrip was trading 6.26 per cent up at Rs 174.05.

Brokerage firm Motilal Oswal said that gold loan penetration levels remain low and the addressable market is very large so niche expertise and single product focus will be growth enablers for Muthoot Finance.

It further added that current valuations of 6.9x FY17 P/E and 1x FY17 BV are attractive.

With Reuters inputs

Coffee shop chain operator Cafe Coffee Day Enterprises is believed to have fixed the price band at Rs 316-328 for its initial share sale. (Souce: CCD Website)

Coffee shop chain operator Cafe Coffee Day Enterprises is believed to have fixed the price band at Rs 316-328 for its initial share sale.

The operator of Cafe Coffee Day shops has filed papers with Sebi for an IPO to raise an estimated Rs 1,150 crore which would be the largest share sale this year so far.

Sources said the price band for the IPO has been fixed at Rs 316-328 and the issue is expected to open on October 14.

This would also be the largest initial share sale by any company so far this year, they added.

The company, which runs the country’s biggest coffee chain under the brand Cafe Coffee Day (CCD), has got private equity giants like KKR, Stanchart PE and New Silk Route as its investors and has reserved Rs 15-crore worth shares for staff.

V G Siddhartha, who is the main promoter as well as Chairman and MD, holds 54.78 per cent stake, while all promoters together have 92.74 per cent holding in the company.

Among other major shareholders, KKR has 3.43 per cent and Nandan Nilekani, Infosys co-founder and former chief of UIDAI, has 1.77 per cent stake.

Shares would be offered to public investors through a Book Building Process wherein 50 per cent of the net issue would be allotted on a proportionate basis to Qualified Institutional Investors, while the company may allocate up to 60 per cent of the QIB Portion to Anchor Investors on a discretionary basis. One third the Anchor Investor portion would be reserved for domestic mutual funds.

Coffee Day Enterprises is the parent company of the Coffee Day Group and operates coffee business through a subsidiary, Coffee Day Global Ltd (earlier known as Amalgamated Bean Coffee Trading Company Limited) and its subsidiaries.

Coffee Day Global Ltd had a total income of Rs 1,154 crore and operating profit of Rs 189 crore in fiscal 2013-14.

In addition to having the largest chain of cafes in India, it operates a vertically integrated coffee business which ranges from procuring, processing and roasting of coffee beans to retailing of coffee products across various formats.

Domestic equity markets opened flat on Wednesday tracking SGX Nifty and Asian markets. Sensex opened 0.13 per cent up at 26,966.86. (Photo: PTI)

9.19 am: The BSE Sensex was down 0.15 per cent at 26,893. The 50-share index was down 0.19 per cent at 8,137. Tata Steel, ICICI Bank and ACC were down over 1.30 per cent each in the morning trade.

Domestic equity markets opened flat on Wednesday tracking SGX Nifty and Asian markets. Sensex opened 0.13 per cent up at 26,966.86. Nifty opened 6.7 points down at 8,146.20.

In the 30-share index, ONGC and Vedanta were up 2.73 per cent and 1.23 per cent in the opening trade.

Asian stock markets were mostly higher Wednesday, taking in stride the IMF’s lower global growth forecast, while Japan traded cautiously as its central bank left monetary policy unchanged.

Back home, Sensex and Nifty gained 0.55 per cent and 0.41 per cent, respectively, on Tuesday.

Jayant Manglik, president, retail distribution, Religare Securities, said, “Sentiments were upbeat on Tuesday from the beginning in response strong global cues, which later gained strength from the statements made by the Finance Minister and the Prime Minister, sharing their view on growth rate and rollout of major reforms like GST as planned. It was mixed session on sectoral front with consumer durables and FMCG topping the chart while IT pack ended in red.”