ICICI Bank Can Trend Higher

Trading Idea – From lows of INR183 on February 25, 2016, ICICI Bank has gradually trended higher to INR238 and I expect the rally to sustain in the foreseeable future. 

Idea Rationale – While ICICI Bank has trended higher in the last one month, the stock is still lower by 26% in the last 12-months. I expect the RBI to cut rates in April 2016 policy meeting and that is likely to trigger further upside for ICICI Bank. I must mention here that public sector banks have witnessed increasing NPAs in the recent past and private sector banks are attractive on a relative basis. 

Long-Term View – India’s banking sector still have huge impending growth potential from a penetration and credit growth point of view. ICICI Bank is India’s largest private sector bank and is well positioned to tap the potential. I also expect long-term value unlocking through separate listing of insurance subsidiary. 

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Bullish On Gold In Medium-Term

Trading Idea – Gold has corrected in the recent past in USD terms and I believe that this correction is a good buying opportunity for 2016. 

Idea Rationale – Yellen recently commented that the fed will not hike rates anytime soon as the global economy is weakening. I see weak economic activity as a positive trigger for gold. Investors will buy gold as store of value and with increasing “risk-off” trade. 

Long-Term View – I am bullish on gold for the next 10-years. The precious metal is probably the only honest currency and will trend higher as all fiat money depreciates on continued expansionary monetary policies. KOTAKGOLD and GOLDBEES are among the gold ETFs investors can consider besides considering exposure to physical gold.  

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Garware Wall Ropes Is Interesting After Correction

Trading Idea – After touching all times highs of INR436, Garware Wall Ropes is currently trading at INR335. In research report dated March 16, 2016, Firstcall Research gave target for Garware at INR360 and I am in agreement with this view. 

Idea Rationale – Garware has corrected on global slowdown as 55% of the company’s revenue comes from outside India. However, with focus on India and with improving EBITDA margins, the company’s results will remain decent and valuations are attractive. 

Long-Term View – Garware Wall Ropes has a solid balance sheet and robust operating cash flows. The company is innovation driven and with “Make In India” campaign, I see long-term benefits. Foray in defense sector products is likely to be rewarding. 

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Infosys Likely To Trend Higher Before Results

Trading Idea – At current levels of INR1,220, Infosys is interesting and can deliver decent near-term returns with the company scheduled to report 4Q16 results on April 15, 2016.

Idea Rationale – Infosys reported strong results for 3Q16 and also revised FY116 guidance upwards. With favourable exchange rates, I expect 4Q16 results to remain robust. Further, I expect higher dividends in 4Q16 with Infosys having significant cash glut. I will not be surprised if the stock trends higher by another 10% from current levels after 4Q16. 

Long-Term View – Infosys is witnessing gradually transition from a pure process driven company to a company that is focusing increasingly on innovation to serve clients better. With $4.7 billion in cash & equivalents, I see Infosys pursuing more inorganic growth to foray into innovation driven technologies and assets. I have a bullish view on Infosys for the long-term as well. 

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