Fund managers opted for safety and predictability in their stock pickings in March when the Sensex and Nifty dropped 23%.
They bought shares of companies with relatively low beta, fairly good dividend yield, good market share in their business and strong backing of the government, which lowers the probability of default on payments.
Their top stock picks were public sector undertakings (PSU companies) which offer reasonably good dividend yield, have high market share in their line of business and stability of earnings due to their favourable business models.
In the private sector, they bought shares of companies with dominant market share.
Here is the lowdown on five companies which managers of leading fund houses bought in March this year.Coal IndiaCMP: Rs 145Market cap: Rs 90,566 croreBought by: HDFC MFA few fundamental factors make Coal India one of the most interesting ideas in the current extremely volatile phase of markets.
Coal India has net cash balance of close to Rs 29,500 crore as of FY20.
It has dividend yield of 9.34%.
If one discounts the fact of low industrial production data largely due to the lockdown restrictions, the companys business model remains intact.
It is the largest coal producer in India with 11 direct and indirect subsidiaries.
It caters to power plants, which form over 70% of offtake of its inventory.
Besides this, the company caters to sectors such as steel, cement, and fertiliser, among others.
Once construction activities start and execution of capital expenditure of India Inc gains pace, Coal India is likely to benefit meaningfully.NTPCCMP: Rs 88.6Market cap: Rs 87,715 croreBought by: Franklin TempletonAssured return on equity business model, high dividend yield of 6.98% and the acquisition of THDC India (formerly Tehri Hydro Development Corporation) and North Eastern Electric Power Corp (Neepco) are a few factors which form convincing arguments for eliciting fund managers interest in the NTPC stock.
NTPC, which is mainly into thermal power, will add 2,500 megawatts of operating hydropower plants through the aforementioned acquisitions.
In the broad market fall in recent months, the companys valuation has become attractive.
Analysts expected the companys earnings per share to grow in the range of 17-19% for the present and the next fiscal.Tata ConsumerCMP: Rs 305Market cap: Rs 28,158 croreBought by: ICICI PrudentialThere are a few key reasons for buying into the shares of Tata Consumer Products.
One, the companys share price fell close to 32% in the third week of March during the broad market fall.
It provided a good entry point for fund managers.
Second, the company, which is into key essential products such as tea, coffee, salt and lentils, was not expected to fall as severely as companies which do not manufacture essential products.
This aspect of defensive theme with a sharp focus on essential products provides it an edge among its peers in the industry.
Thirdly, the companys financials have been fairly stable with reasonably good growth in revenues over the past few years.
Lastly, the parentage of the Tata Group offers stability to its balance sheet in uncertain times.ITCCMP: Rs 182Market cap: Rs 2.23 lakh croreBought by: SBI MFA diversified business model, attractive valuations compared to its own historic averages and high dividend yield are attracting investors to this stock.
Investors have been impressed with its strong operating cash flows, continuous capacity expansions across businesses and a healthy balance sheet.
The company has declared its dividend policy last month, increasing its payout to 80-85% of earnings, which makes its dividend yield attractive, one of the highest a frontline company pays, giving huge margin of safety.SBICMP: Rs 184Market cap: Rs 1.64 lakh croreBought by: HDFC MFA public sector banking giant, it has maintained its share of current and savings bank accounts in the market, despite the entry and aggressive marketing campaign of private sector banks, which is attracting long-term investors to the bank.
It is the market leader in retail assets like mortgage and auto loans with its assets being of high quality, while its corporate NPAs are staying low.
All its subsidiaries like SBI AMC, life insurance, general insurance and SBI Cards are leaders in their business and have added value to the bank.Top money making ideas13 Apr, 2020Investors struggled to find right bets as the market direction remained hazy amid rise in coronavirus cases in the country.
Talks of an extended lockdown also pushed the bulls on the back foot after stellar rally last week.In just three sessions last week, Sensex and Nifty, snapped a seven-week losing streak and rose 10 per cent each.While many believe the bottom has been formed, the market may also take cues from the number of new coronavirus infections and the quarterly corporate earnings season.In this backdrop, here are 12 money-making ideas that may deliver gains over the next few weeks.
ACC| Buy | Target price Rs 1,095 | Stop loss Rs 91813 Apr, 2020The counter is attractively placed with two positive closes on weekly charts and appears to be on the path of consolidation after hitting a bottom at recent low of Rs 895, the analyst said.
He believes that sooner than later the stock should witness a breakout above the congestion zone of last eight sessions present in Rs 1,010925 range.
Hence, positional traders in anticipation of a breakout should buy into this counter and add further on declines into the zone of Rs 955940 and look for a target of Rs 1,095.[Mazhar Mohammad, Chief Strategist Technical Research - Trading Advisory, Chartviewindia.in] Sterlite Technologies | Buy | Target price Rs 87 | Stop loss Rs 6213 Apr, 2020According to the analyst, the weekly chart of this counter is looking very promising as three preceding weekly candles turned into extremely narrower trading range hinting that selling pressure is drying up.
With decent basing formation for last 17 sessions this counter appears to be ripe for a breakout, he said, recommending positional traders to buy into this counter and look for a target of Rs 87.[Mazhar Mohammad, Chief Strategist Technical Research - Trading Advisory, Chartviewindia.in] Apollo Tyres | Buy | Target price Rs 107 | Stop loss Rs 8313 Apr, 2020According to the analyst, after two weeks of Doji kind of indecisive formations on weekly charts this counter registered a robust bull candle, hinting that it has embarked on a short-term uptrend, which is clearly visible with higher top and higher bottom type of bullish sequence on daily charts.
Moreover, it has decisively closed above its 9-day EMA, which was acting as resistance on pull back attempts, he said.
The experts recommended positional traders to buy into this counter with a target of Rs 107 with a stop below Rs 83 on closing basis.[Mazhar Mohammad, Chief Strategist Technical Research - Trading Advisory, Chartviewindia.in] Bajaj Finserv| Buy | Target price Rs 5,800 | Stop loss Rs 4,40013 Apr, 2020The stock seems to have completed Wave B retracement and now it has provided a breakout from the downtrend line resistance.
With a breakout from the downtrend line resistance Wave C up seems to have started and the minimum target on the upside comes to Rs 5800, the analyst said.
The daily as well as hourly momentum indicator MACD is well in the buy mode with a positive divergence, he said, adding that he recommends buying the stock for a target of Rs 5,800 with a stop loss of Rs 4,400.[Jay Thakkar, Vice President and Head of Equity Research, Marwadi Shares]