The Indian stock market has entered the new year with a strong note. The benchmark indices ascended nearly 3% in the first week of the new year. Among various stocks, many experts expect the following top ten stocks to deliver strong returns over the next few weeks.
1. Hindalco Industries Ltd: 507.50 INR +9.55 (1.92%)
Hindalco is the primary metals company of the Aditya Birla Group. Its stock has gained above 2% on January 12, 2022, after Novelis Inc’s – its wholly-owned subsidiary – announced to invest $365 million to build the recycling plant.
There is a healthy intermediate uptrend for the stock with consistent higher tops and bottoms during the entire previous year. There has been a recent correction, and the stock has thereafter bounced back. Breaking out on Friday, the stock recorded above-average volumes.
Insights – Know Before You Invest
| Sector | Aluminium |
| Market Cap | INR 114,043 Crores |
| 20D Avg Volume | 7,109,305 |
| 20D Avg Delivery | 36.37% |
| Face Value | 1 |
| Book Value Per Share | 296.13 |
| Industry Price Earning (P/E) Ratio | 57.26 |
| Price-to-Book (P/B) Ratio | 1.72 |
| Dividend Yield | 0.59 |
| Peers | JSW Steel, Tata Steel, SAIL, NMDC |
Company SWOT Analysis
| Strengths | A growth stock selected based on CANSLIM investment criteria – fundamental and technical analysis. |
| Weaknesses | Declined ROE in the last two years |
| Opportunities | Brokers upgraded recommendation in previous three months |
| Threats | Boosting trend in non-core income |
2. Oil and Natural Gas Corporation Ltd. (ONGC): 163.80 INR -1.15 (-0.70%)
With a sudden increase until October 2021, stock price documented a corrective phase within an uptrend. The volumes have been reasonable during the upward price move and low during corrections, which is a favorable sign. There has been some buying interest. The stock price has shown a breakout above its swing high on the 1-15-minutes chart. Experts are expecting the stock to rally in the near term.
Insights
| Sector | Oil Drilling And Exploration |
| Market Cap | INR 206,631 Crores |
| 20D Avg Volume | 11,769,355 |
| 20D Avg Delivery | 43.02% |
| Face Value | 5 |
| Book Value Per Share | 160.8 |
| Industry Price Earning (P/E) Ratio | 16.68 |
| Price-to-Book (P/B) Ratio | 1.03 |
SWOT Analysis
| Strengths | High trailing twelve months (TTM) Earnings Per Share (EPS) Growth |
| Weaknesses | Return on capital employed (RoCE) declined in the last two years, showing inefficient use of means to generate profits. |
| Opportunities | The current TTM P/E Ratio is less than the previous 3 Years P/E |
| Threats | Rising Trend in Non-Core Income |
| Face Value | 5 |
| Book Value Per Share | 160.8 |
| Industry Price Earning (P/E) Ratio | 16.68 |
| Price-to-Book (P/B) Ratio | 1.03 |
| Dividend Yield | 2.19 |
| Peers | Reliance, Petronet LNG, Oil India, HOEC |
3. Dr Lal Pathlabs : 3,766.55 INR +93.75 (2.55%)
The stock is fundamentally strong. The stock is presently trading at Rs. 3766. Investors should show a buying interest for Lal Path Labs stock in the short term because of a breakout above a declining trendline resistance of the consolidation. During the last month, it was observed that the volume action was good during an up move in prices, but corrections were not backed by higher volumes, which is a favorable sign.
Insights
| Sector | Pharmaceuticals |
| Mkt Cap (Rs. Cr.) | INR 31,180 Crores |
| 20D Avg Volume | 160,607 |
| 20D Avg Delivery | 60,070 |
| Face Value | 10 |
| Book Value Per Share | 148.33 |
| Industry Price Earning (P/E) Ratio | 127.03 |
| Price-to-Book (P/B) Ratio | 25.21 |
| Dividend Yield | 0.54 |
| Peers | Metropolis, Apollo Hospital, Max Healthcare, Fortis Health |
SWOT Analysis
| Strengths | High Piotroski Score with strong financials |
| Weaknesses | Mutual Funds decreased their shareholding last quarter |
| Opportunities | Positive Breakout First Resistance |
| Threats | Degrowth in earnings in one fiscal quarter than the previous |
Piotroski’s score is based on the three most important criteria – Leverage, Operating Efficiency, and Profitability. Nine criteria were used to determine the score that shows the strength of a firm’s financial position.
4. Ultratech Cement: 7,606.80 INR -51.90 (-0.68%)
The company declared the commissioning of Line II of Uttar Pradesh based Bara Grinding Unit. The line I was earlier commissioned in Jan 2020, with capacity utilisation of over 80%.
Backed by high volumes, the stock broke out of the recent trading range on new year’s eve. The intermediate technical setup looks buoyant with the stock trading above key moving averages, and the uptrend is set to continue.
Insights
| Sector | Cement-Major |
| Market Cap | INR 219,582 Crores |
| 20D Avg Volume | 264,786 |
| 20D Avg Delivery | 48.71% |
| Face Value | 10 |
| Book Value Per Share | 1530.5 |
| Industry Price Earning (P/E) Ratio | 40.44 |
| Price-to-Book (P/B) Ratio | 4.98 |
| Dividend Yield | 0.49 |
| Peers | Shree Cements, Dalmia Bharat, Ambuja Cements |
SWOT Analysis
| Strengths | Improved RoCE in previous two years- effective use of capital to generate profit |
| Weaknesses | Rising costs Year-over-Year (YoY) for long term projects |
| Opportunities | Brokers upgraded recommendation in previous three months |
| Threats | Upcoming results for Nifty500 with decreasing share price over the week |
5. State Bank of India (SBI): 511.35 INR +1.10 (0.22%)
After a short-term correction, there is a double bottom formation on daily and weekly charts. Such a promising bullish candle indicates a strong possibility of a new uptrend.
Insights
| Sector | Public Banking Sector |
| Market Cap | INR 456,360 Crores |
| 20D Avg Volume | 16,015,921 |
| 20D Avg Delivery | 34.14% |
| Face Value | 1 |
| Book Value Per Share | 293.13 |
| Industry Price Earning (P/E) Ratio | 21.27 |
| Price-to-Book (P/B) Ratio | 1.75 |
| Dividend Yield | 0.78 |
| Peers | Bank of Baroda, Canara Bank, Indian Overseas Bank, PNB |
SWOT Analysis
| Strengths | Increasing Net Cash Flow |
| Weaknesses | High Debt |
| Opportunities | The current TTM PE Ratio is lower than in the past 3 Years |
| Threats | Increased NPA in Recent Results |
6. Asian Paints: 3,456 INR -87.55 (-2.47%)
Recently, the stock gave breakouts of the ‘SAUCER’ price pattern on the weekly charts, and it has continuously been making lifetime highs since August 2020. It shows a solid positive undertone with a big bullish candle that is backed by strong volumes indicating a favorable trend.
Insights
| Sector | Paints & Varnishes |
| Market Cap | INR 331,522 Crores |
| 20D Avg Volume | 799,696 |
| 20D Avg Delivery | 50.75% |
| Face Value | 1 |
| Book Value Per Share | 137.92 |
| Industry Price Earning (P/E) Ratio | 103.05 |
| Price-to-Book (P/B) Ratio | 25.06 |
| Dividend Yield | 0.52 |
| Peers | Berger Paints, Kansai Nerolac, Indigo Paints, Akzo Nobel |
SWOT Analysis
| Strengths | Low Debt |
| Weaknesses | Negative Breakdown Third Support |
| Opportunities | Brokers upgraded recommendation in previous three months |
| Threats | Recent Broker Downgrades in Target Price |
7. Hindustan Unilever (HUL): 2416.00 INR +3.10 (0.13%)
HUL has raised its product prices – soaps and detergents – by 3-20%. Net Sales are expected to rise by 7.3% YoY (up 0.2% QoQ) to Rs. 13,046 crore. The company has sustained a good dividend track report for five years. The company has announced an equity dividend of 3100% (Rs. 31 per share) for the year ending March 2021 – a dividend yield of 1.29% at the current share price of Rs. 2408.60. Earnings before interest, tax, depreciation, and amortisation (EBITDA) are likely to rise by 6.2% YoY.
There is a higher bottom formation on daily charts for the stock, indicating a new uptrend.
Insights
| Sector | Personal Care |
| Market Cap | INR 567,238 Crores |
| 20D Avg Volume | 1,274,903 |
| 20D Avg Delivery | 62.25% |
| Face Value | 1 |
| Book Value Per Share | 202.99 |
| Industry Price Earning (P/E) Ratio | 66.59 |
| Price-to-Book (P/B) Ratio | 11.9 |
| Dividend Yield | 1.28 |
| Peers | Dabur India, Godrej Consumer, Marico, P&G |
SWOT Analysis
| Strengths | No Debt |
| Weaknesses | Mutual Funds reduced their shareholding last quarter |
| Opportunities | Brokers upgraded recommendation in previous three months |
| Threats | Recent Broker Downgrades in Target Price |
8. HCL Tech: 1334 INR -17.90 (-1.32%)
After a range breakout formation on daily charts, the stock has maintained significantly higher high-low formations and charts indicate a strong possibility of a further uptrend from current levels. For Q3 2021, the company reported a total income of Rs 20895 Crores, an increase of 2.81% from last quarter. The net profit after tax was documented at Rs 3263.00 crores in the latest quarter. Promoters held a 60.33% stake in the company as of Q3 2021, DIIs owned 12.47%, and FIIs 22.3%. Backed by volumes and favorable technical indicators, the stock confirms the bullishness.
Insights
| Sector | Computers-Software |
| Market Cap | INR 3,62,070 Crores |
| 20D Avg Volume | 4,325,797 |
| 20D Avg Delivery | 49.84% |
| Face Value | 2 |
| Book Value Per Share | 221.4 |
| Industry Price Earning (P/E) Ratio | 44.3 |
| Price-to-Book (P/B) Ratio | 6.03 |
| Dividend Yield | 0.75 |
| Peers | TCS, Infosys, Wipro, Tech Mahindra |
SWOT Analysis
| Strengths | Increasing Net Cash Flow |
| Weaknesses | -ve Breakdown First Support |
| Opportunities | Brokers upgraded recommendation in previous three months |
| Threats | – |
9. Rain Industries Limited (RAIN): 253 INR +12.30 (5.10%)
RAIN is a foremost vertically integrated producer of carbon and advanced materials products with manufacturing facilities in eight countries across three continents. Lately, the stock gave range breakouts above the previous 8-week highs accompanied by supportive volumes.
Insights
| Sector | Cement – Major |
| Market Cap | INR 8,523 Crores |
| 20D Avg Volume | 3,265,846 |
| 20D Avg Delivery | 24.30% |
| Face Value | 2 |
| Book Value Per Share | 169.62 |
| Industry Price Earning (P/E) Ratio | 40.44 |
| Price-to-Book (P/B) Ratio | 1.5 |
| Dividend Yield | 0.39 |
| Peers | Phillips Carbon Black Limited (PCBL), Goa Carbon |
SWOT Analysis
| Strengths | High TTM EPS Growth |
| Weaknesses | – |
| Opportunities | Positive shifts in share price with upcoming results |
| Threats | The increasing trend in non-core income |
10. Balaji Amines Ltd: 3,686.70 INR +1.70 (-0.05%)
Balaji Amines documented improved earnings, revenues, and profit margins. Revenue for FY 2021 is increased by 40% from FY 2020. Net income was increased by 127% from FY 2020. The profit margin has moved up by 18%.
Insights
| Sector | Chemicals |
| Market Cap | INR 11,945 Crores |
| 20D Avg Volume | 99,832 |
| 20D Avg Delivery | 32.15% |
| Face Value | 2 |
| Book Value Per Share | 280.83 |
| Industry Price Earning (P/E) Ratio | 51.75 |
| Price-to-Book (P/B) Ratio | 13.13 |
| Dividend Yield | 0.11 |
| Peers | Aarti Ind, Atul, Gujarat Fluoro, Clean Science |
SWOT Analysis
| Strengths | High Piotroski Score with strong financials |
| Weaknesses | Increasing costs YoY for long term projects |
| Opportunities | Brokers upgraded recommendation |
| Threats | Rising trend in non-core income |
Finally, timing the entry points into stock will also matter the most along with the plan to exit it over the next few weeks. The markets might show signs of volatility owing to various macro-economic factors like policy announcements in the U.S and India, but good stocks will eventually hold up.