Transport: ₹30L cr boost likely

Focus on transport sector may continue

According to rating agency ICRA, transport infrastructure like roads, railways, metro, airports, ports and inland waterway will remain a key focus area for the new government. The agency expects to see Rs.25-30 trillion investment in the sector over the next five years. It is likely that major programs like Bharatmala, Sagarmala and UDAN  launched during the previous tenure will be continued.

In related news, Government is prioritizing the completion of Eastern and Western dedicated freight corridors by 2021.  98.5% of the land acquisition has been completed and most of the contracts for commencement of construction have been awarded. The freight corridors cover  3,360 km of track across 9 states, and are vital to increase the total traffic of the Railways by at least 144 million tonne by 2022.

The Transporting India smallcase consists of companies that will gain from the boost in growth of the logistics sector.

Unifying Value & Momentum strategies

Stocks trading at a price below their intrinsic/fair value are called value stocks. In other words this is like coming across a great discount offer when shopping. This smallcase shortlists companies that are undervalued compared to their industry peers. In addition, it also seeks out companies which have earned higher than expected profits during the latest reporting period.

Momentum investing is a strategy based on the observation that stock movement trends can persist for some time. The strategy attempts to capitalize on this trend by buying stocks that have been trending up and selling ones that are trending down. This smallcase adopts the same strategy and selects stocks that have been trending up over the previous 3-6 months period.     

The Value & Momentum smallcase has gained 6.92% over the last 1 month and trading at a steep 38.5% discount to Nifty smallcap PE.

Markets Update

After reaching 40,000 and 12,000 levels respectively, Sensex and Nifty dropped down marginally on Friday; however benchmark indices ended the week in green. Sensex closed up 0.71% at 39,714.2 and Nifty closed up 0.66% at 11,922.8 over previous Friday’s close.

GDP growth rate during Jan -March quarter of 2019 dropped down to 5.8% compared to 7.7% recorded during the same quarter the previous year.

Infrastructure output in April 2019 grew by 2.6%, below street estimate of 4.4%.

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Making smalltalk

Each time India plays a World Cup match…

“…the Sensex goes up only 0.16% the day after India wins a match – but an incredible 1.45% the day after India loses a World Cup match…do election results really impact the long-term performance of Indian stock markets?”

Read the newsletter Issue #16 here.

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