Midcap Monitor: 5 stocks to buy at current levels

The broader markets have extended their gains and have outperformed the benchmark indices. The BSE Mid-cap index has advanced 0.66% to 6,543 and the small-cap index is up 0.67% at 6,489.

Benchmark indices are trading near day's low with the Sensex and Nifty hovering around 21,000 mark and 6,250 levels, respectively. Markets experts say that the Indian markets this week likely be impacted by reaction to subdued economic growth data for December quarter, overseas investment trends and global cues.

At 12:15 PM, the 30-share Sensex was down 54 points to trade at 21,066 and the 50-share Nifty was down 20 points at 6,257 levels. Investors are booking profit after the Sensex last week gained 419.37 points -- the best since the week ending November 29, 2013.

On the global front, stocks slid while oil prices shot up on Monday, after Russia bloodlessly seized a part of Ukraine, escalating tensions between Russia and the West to a level not seen since the end of the Cold War.

US stock futures fell 0.7% from a record high hit on Friday while Japan's Nikkei average tumbled 1.3%. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6%.

Back home, among the key mid-cap gainers, AstraZeneca Pharma India has hit the upper circuit filter of 20% at Rs 1,113 on the National Stock Exchange (NSE), after its Sweden-based parent company AstraZeneca Pharmaceuticals AB suggested that it plans to delist company’s equity shares from the Indian stock exchanges.

TVS Motor Company is trading higher by 4% at Rs 89 after reporting 6% year-on-year growth in two-wheeler sales in February 2014 to 170,293 units from 160,895 units during the same month last year.

Monsanto India is locked in upper circuit for second day in a row, up 20% at Rs 1,613, also its new high on the BSE, on reports that the Union ministry of environment and forests (MoEF) has approved field trials of genetically modified (GM) food crops on a conditional basis.

Jubilant Life Sciences is up nearly 6% at Rs 131, extending its Friday’s 8% rally on the NSE after the company said its manufacturing facility at Montreal, Canada, has got a clean chit from the US Food and Drug Administration (US FDA).

HT Media has surged nearly 5% to Rs 80.90 after Rakesh Jhunjhunwala bought 1.5 million shares in the company though open market.

Stocks of companies associated with the railways are trading higher by up to 17% in noon deals on media reports that the government is likely to take up new norms for liberalising the foreign direct investment (FDI) regime in railways.

Kernex Microsystems (India), Kalindee Rail Nirman (Engineers), Titagarh Wagons, Texmaco Rail and Engineering and Hind Rectifiers are up 7-17% on the Bombay Stock Exchange (BSE).

The overall breadth of the BSE midcap remains healthy as 155 stocks are declining while 59 are advancing.

STOCKS TO BUY

Ravi Shenoy, Asst Vice President (Mid-cap Research), Motilal Oswal Securities adds, “Whenever the rally in large space starts fizzling out, midcap run up continues. Earnings momentum continues to be there in the Midcap segment. Retail participation can be seen in this space as they prefer low priced stocks rather than investing in the blue chip companies which are expensive. Retail investors continue to prefer low priced stocks.

Top picks

Finolex Inds- Market capitalization is about Rs 1,200 cr. The stock should do well and reach close to Rs 205 -210 cr next year. The target price for the stock is Rs 100.

There are 2 stocks in the media space that can give a good returns ahead of the elections. TV Today from an election perspective. The company runs the Aaj Tak news channel. With election coming up, there would be lot of interesting programs and advertisement from political parties. 25% upside is expected in this stock from the current levels. Entertainment Network because the radio auction is likely to be held sometime this year. The auction would drive growth in the particular stock. 15-20% revenue growth is expected.

From the Smallcap space- Suprajit Engineering will do about Rs 550 cr of revenue this year and is expected to do Rs 650 cr  of business next year. Market captalisation is Rs 700 cr. It is a debt free company with a decent cash flow. The target price for the stock is Rs 70.

Kunal Bothra, Technical Analyst, LKP Securities says, “with Nifty most likely entering into consolidation phase, the midcaps could start to outperform from here. For example on a sideways to slight negative day for Nifty, the A/D ratio is in the favour of advances, so far. This is a sign that the midcaps are gaining strength.

The stock to buy is VIP Industries for a target price of Rs 90, stop loss at Rs 67. Stock has broken out of an inverse H&S pattern, neckline is at 70 levels.