LIC bet on these 10 small & midcap multi-baggers returned up to 1,000% in 1year

Kshitij Anand

India’s biggest domestic institutional investor Life Insurance Corporation (LIC) saw value additions of nearly Rs 14,000 crore to its portfolio even though the number of stocks in its portfolio decreased to 367 from 375 recorded in the December quarter.

Data available with Ace Equity till May 16 shows a list of 10 stocks in LIC’s portfolio that have emerged as multi-baggers in the last one-year. Most of the stocks that have returned 100-1,000 percent in the last one-year belong to the small and midcap space, which recently went through a massive correction.

If comparison, the BSE Midcap Index has plunged a little over 10 percent, followed by a near nine percent fall in the BSE Smallcap Index compared to 3.9 percent rise in the BSE Sensex so far in 2018.

Small and midcap stocks in which LIC holds considerable stake includes: HEG, Graphite India, Lime Chemicals, Bombay Dyeing, Excel Industries, Shalimar Wires, Lakshmi Automatic, Punjab Alkalies, NIIT Technologies and Sterlite Technologies.

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Most mid- and smallcap stocks that emerged multi-bagger in 2017 came under pressure thanks to mutual fund reclassifications introduced by the market regulator, lofty valuations, rising crude oil prices and a falling rupee to the dollar.

Midcaps have struggled over the last few months, resulting in underperformance versus largecaps. Over the last 12 months, midcaps have underperformed largecaps, but it still trades at a 23 percent premium to the Nifty in terms of P/E, a report said.

A large part of the underperformance in the midcaps space can be attributed to profit-booking, especially after the stellar run seen in 2017. “Some of these high valuation stocks corrected when markets fell in February and March. Post that correction, some midcaps have started to come into an attractive valuation zone,” said Jagannadham Thunuguntla, Senior Vice-President and Head of Research (Wealth), Centrum Broking.

Sounding a cautionary note, he said investors should focus on quality companies with strong earnings be it largecaps or midcaps.

We have collated views from various technical experts on stocks which have given stellar returns in the last one-year and what investors should do now if they are holding these stocks:

Analyst: Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in

HEG: Target Rs5200

After a multi-fold rise from the lows of Rs 150 which it registered in January 2017, this counter appears to have resumed its up move after a multi-month corrective and consolidation phase. In the near-term, the current momentum may take it towards Rs 3,900 kind of levels.

However, a major breakout will occur once this counter settles above Rs 3,900 levels and in such a scenario a new target of Rs 5,200 can be expected. A short-term downtrend can resume only on a close below Rs 3,200 levels.

Graphite India: Target Rs 1,150| Buy on dips

In May 2017 this counter was trading at a low of Rs 107 and thereafter its fortunes turned as it multiplied itself by 9 times before slipping into multi-month corrective and consolidation phase.

After the recent result, this counter appears to have resumed its up move with an initial target of Rs 906 but once it settles above lifetime highs of Rs 906 levels a bigger target of Rs 1,150 can’t be ruled out.

A short-term downtrend in this counter will kick in only on a close below Rs 740. Till then, positional traders can make use of dips to accumulate.

Bombay Dyeing: Target Rs 320

The short-term trend in this counter appears to be somewhat down and the weakness may get accelerated further on a close below Rs 277 levels.

In such a scenario it can target close to 245 kind of levels. Hence, traders are advised to have a tight stop below Rs 277 on a closing basis.

If it manages to sustain above Rs 277 then a modest target of Rs 300 – 320 can be expected. A major move in this counter is unlikely to happen unless it sustains above Rs 322 levels.

Excel Industries: Target Rs 1,900

After a sporadic rise from the lows of Rs 350 registered in July 2017, this counter appears to have hit intermediate top around Rs 1,463 in April 2018.

Since then, it is trading in a corrective and consolidation phase and weakness may further get accelerated if it slips below Rs 1,212 on a closing basis.

Hence, traders can continue with their existing positions with a stop below Rs 1,200 and look for an initial target of Rs 1,450. This counter may resume its upward momentum on a sustainable close above Rs 1,465 levels. In such a scenario a target close to Rs 1,900 can be expected.

Analyst: Achin Goel, Head of Wealth Management and Financial Planning, Bonanza Portfolio Ltd

Sterlite Technologies Ltd: Target Rs 360

The stock has been consolidating since the inception of the current year with Rs 300 and Rs 400 is the bands. In the recent action, the stock has shown an initial sign of reversal from 310 level. Multiple lows are seen at 310 on the daily chart.

Therefore, Rs 310 is expected to act as crucial support in the near to short-term. The near-term trend in the stock price may remain positive as long as the price sustains above Rs 310.

On the higher end price may extend its northward movement till Rs 350 – 360. Chances of more upsides will come into the picture once price settles above Rs 360. On the other hand, a breakdown below Rs 300 may push the stock into the bear phase.

NIIT Technologies Ltd: Target Rs 1300

The stock is in a structural uptrend and every correction has been well bought by the participants. Currently, the price has been consolidating after a steep correction.

In this situation accumulation is a good option for the next bull ride in the stock. A fall towards Rs 1,000-970 should be utilized as a buying opportunity.

On the lower end, 950-900 bands are expected to act as crucial support. A slip below Rs 900 could result in the stock losing its uptrend and will enter in a larger degree consolidation. On the higher end, we may lock our expectations for Rs 1,300-1,400 levels.

Punjab Alkalies: Target Rs 59

The stock has witnessed a spectacular rally since early March this year. Currently, the stock is in a short-term consolidation phase. In the current trend, the stock price may dip towards 37-35.

The trader may place a tight stop loss below 35, and a decisive fall below 35 may take the stock weaker zone. On the other hand, if the stock manages to stay afloat above 35 we may see solid rebound in the price.

In that case, the traders may expect a movement which may take the price towards 56-59.

Lakshmi Automatic Loom: Keep a stop below Rs 50

The stock had witnessed a steep rally from 50 to 68.55, and since then it has been in a downwards consolidation. Currently, the stock has been trading in the middle of the range.

Going forward, the bands on either side will act as a magnet. The magnetic pull may direct the stock price towards the poles (50/70).

Traders are expected to lock their loss at 50, because if it slips below 50 then the stock price may lose its shine and fall into bear phase. On the other hand, Rs 70 would be level above stock price may up move up quickly towards Rs 90.

Shalimar Wires Industries: Crucial support at Rs 16

The stock is in short term downtrend, which may come to a halt at 16. A recovery in the stock may happen if it sustains above the said level.

The rebound may take the price towards 22. Again, a sustained trade above Rs 22 may set a new rally towards Rs 27. However, if the fall doesn’t get arrested at 16, we may see a bigger correction in the stock price.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.