Many broader market stocks available at attractive valuations

Indian market witnessed another strong day of gains on May 27 as Sensex rallied over 200 points while the Nifty reclaimed 11,900 on closing basis.

Let’s look at the final tally – the S&P BSE Sensex closed 248 points higher at 39,683 while the Nifty50 added 80 points to end at 11,924. The Nifty Bank rose 435 points or 1.39 percent to close at 31,647.

Benchmark indices rallied about 4 percent each last week and a stable day of gains on May 27 suggests continuity of the ongoing rally.

In terms of sectors, the S&P BSE Capital Goods index rose 3 percent, followed by the S&P BSE Power index, which was up 2.8 percent and the S&P BSE Metal index that gained 2.2 percent.

The broader market outperformed benchmark indices as the S&P BSE Midcap index rose 1.1 percent while the S&P BSE Smallcap index closed 1.77 percent higher. Most experts feel many stocks in broader markets are available at attractive valuations.

“It is very attractive to invest in mid and smallcaps in spite of runaway in prices during the last few trading sessions. The economy is expected to revamp from the second half of FY20 led by growth agenda,” Vinod Nair, Head of Research, Geojit Financial Services Ltd told .

“On average they are available at one year forward P/E of 15x compared to an average of 18x in the last five year with a peak of 25x. The undercurrent is expected to be buoyant with hope over the upcoming final budget,” he said.

Top Sensex gainers include names like Tata Steel (up 5.7 percent), Yes Bank (3.7 percent) and NTPC (up 3.2 percent). Top gainers include IndusInd Bank (down 2.3 percent), and RIL and Asian Paints that were down 1-2 percent.

Stocks in news:

Narayana Hrudayalaya shares climbed 13 percent after the company reported healthy earnings growth in Q4. The multi-specialty hospital chain’s profit grew a whopping 279 percent YoY to Rs 37.16 crore and revenue increased 18.3 percent to Rs 765.2 crore in the quarter ended March 2019.

Ashok Leyland shares fell more than 2 percent as global brokerages maintained neutral to sell rating after company’s March quarter performance. The country’s second largest commercial vehicle maker’s March quarter profit fell 12.1 percent YoY to Rs 653 crore.

Global brokerage firms such as Morgan Stanley, Nomura, and Deutsche Bank maintain their buy rating on Indraprastha Gas (IGL) post Q4 results and see the upside of up to 30 percent from May 24 close of Rs 313. The stocks closed with gains of over 5 percent.

Manpasand Beverages shares were locked at 20 percent lower circuit at Rs 88 on May 27 after the top management was arrested by the Central Goods and Services Tax (GST) Commissionerate Vadodara-II sleuths for an alleged GST fraud.

Global cues:

European market is trading higher as investors are focusing on results of the EU parliamentary elections.

Germany’s DAX was up 0.3 percent, while France’s CAC rose nearly 0.2 percent. UK markets are closed on May 27 due to a public holiday.

Asian markets ended mixed on the back of developments from US President state visit to Japan. Shanghai Composite added 1.38 percent at 2,892.38 and Hang Seng shed 0.24 percent at 27,288.

Nikkei gained 0.31 percent at 21,182.58 and Kospi ended flat at 2,044.21.