Riding the Momentum in Undervalued Stocks

A combination of value and momentum

The Value and Momentum smallcase provides exposure to undervalued stocks that are witnessing momentum in their price. A combination of value and momentum can be ideal when it comes to stock investments. These stocks have also earned higher than expected profits during the latest reported period.

The smallcase is trading at 13% discount to Nifty PE. 7 out of the 15 stocks in the smallcase have an upside of at least 10%, according to analysts. 10 stocks in the smallcase have at least 10% institutional holding. High institutional holding indicates good management quality, favourable performance track record and expectation of bullish performance going forward.

The smallcase has gained 2.42% over the previous month and 23.63% over the previous 1 year, in comparison to Nifty returns of 1.21% and 16.71% during the same periods.

New National Auto Policy in the anvil

Auto companies have reported good sales numbers for August 2018. Ashok Leyland sold 17,386 units, a growth of 27.5% versus 13,637 units sold during the same period a year ago. Tata Motors sold 58,262 units during the same period, a growth of 26.9% on year-on-year basis. Mahindra & Mahindra’s August auto sales were up 14% at 48,324 units. Its tractor sales rose 7% at 17,785 units, while exports grew 10% at 1,410 units. Hero Motocorp sold 685,047 units in August 2018 against 678,797 units of two-wheelers in the corresponding month of the previous fiscal.

Union Minister of Heavy Industries, Anant Geete, last week said that a new National Auto Policy is currently being readied that will lay emphasis on reducing vehicular emissions as well as focus on green mobility. The new auto policy will accommodate the wishes of the entire industry and take their suggestions into account. The new policy envisages having a nodal regulatory body for the automobile industry. The draft policy released earlier had recommended rationalisation of the Goods and Services Tax (GST) structure for automobiles.

Benefit from the growth of auto industry by buying the smallcase Auto Tracker.

Electric vehicles to be exempt from permit requirements 

Speaking at India’s first-ever Global Mobility Summit, Prime Minister Narendra Modi promised global technology and automobile companies – a stable policy regime to make India a pioneer in electric mobility. He said that India will do whatever it takes to usher in electric mobility in a big way as it holds immense promise for economic growth and ease of living. He said that charged mobility is the way forward and the government was keen to drive investments across the value chain from batteries to smart charging to electric vehicle (EV) manufacturing.   

Speaking at an SIAM event last week, Union Transport Minister Nitin Gadkari said that all electric vehicles would be exempt from permit requirements. A permit is an instrument issued by a State or Regional Transport Authority authorising the use of a motor vehicle as a transport vehicle in a specified manner as per the relevant provisions of the Motor Vehicle Act. The types of permits that apply for commercial vehicles include contract carriage bus permit, goods carrier permit and cab permit, among others. So the move to end the permit raj for green vehicles will save owners time as well as money. He also said that demand for EVs could also be created by mandating cab aggregators like Ola and Uber to induct a certain percentage of such vehicles in their fleet.

In the recent past, we had discussed the FAME India scheme and the government’s intention to provide subsidy for e-vehicle infrastructure. You can read about it here.

Take advantage of the evolution of the electric vehicle industry by investing in the Electric Mobility smallcase.

Rupee hits all-time low

Surging bond yields and dropping Rupee combined to pull down benchmark indices this week. Sensex ended down 0.66% at 38,389.8 and Nifty ended down 0.78% at 11,589.1.

Due to a rout in emerging market currencies, the Rupee hit an all-time low of 72.11/$ during the week.

The Nikkei Manufacturing PMI came in at 51.7, indicating continued expansion of manufacturing activity, albeit at a slower rate. The numbers were below street estimates of 52.3. The Nikkei Services PMI came in at 51.5, signalling slower growth of service activity; numbers were below street estimate of 52.1.