2 weeks Ago
Even after doubling investor money in the last one year, shares of Trent and Bharat Electronics Ltd ( BEL ) are likely to keep minting money for investors as the two multibagger stocks get included in the bluechip Nifty50 index with effect from today. The stock market follows a historical pattern of rewarding new entrants. Out of the 15 stocks that have been included in Nifty since 2018, 11 of them have given positive returns in the next 12 months of their entry, shows data from SAMCO Securities.
Shriram Finance, which entered Nifty in March 2024, is already up 49%. On an average, new entrants in India's heartbeat index have given a return of 12% in the next 1 year. Divi's lab and HDFC Life Insurance, which debuted in Nifty together in October 2020, rallied 59% and 51%, respectively in the next one year.
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The possibility of picking a winner increases if you hold the stock longer. The average winning rate of new entrants is 60% in 3 months with an average return of 4%, according to the data. When you increase the holding period to 6 months, the chances of you having a winner increases to 67% and further to 71% if you sit tight for one year.
Before betting on Trent and BEL, do not forget to note that a Nifty ticket isn't a sure-shot formula for success. JSW Steel , which found itself in the hot seat in October 2018, kept on losing its market value since the inclusion. In the next one year, investors were sitting with a 43% loss.
Grasim , Apollo Hospitals and Adani Enterprises are other examples of stocks that lost value after Nifty inclusion. Trent Tata Group's fashion and lifestyle retailer Trent, best known for brands like Westside, Zudio and Star, will now have a weightage of 1.5% in Nifty, leading to expected net inflows of about $495 million.
The stock has been one of the favourite stocks in the consumer discretionary space and has given a mind-blowing return of 1,473% in the last 5 years. Global brokerage firm Citi, which initiated coverage on Trent just last week with a target price of Rs 9,250 vs Friday's closing price of Rs 7,823, said it expects PAT to grow at a CAGR of 56% in FY24-27. "Leveraging on its supply chain, as well as learnings from Westside and Zudio, Trent is turning around Star and can meaningfully scale up other pilot projects (Misbu, Samoh, MAS JV).
In addition to ranking it a top pick in our India consumer discretionary and retail coverage, we include Trent in our Pan-Asia high-conviction Focus List," Citi said. BEL Defence PSU stock BEL will have 1% weightage in the 50-stock index from today. As a result, Nuvama expects net inflows of about $336 billion.
Shares of the supplier of electronic equipment and systems to the defence sector have gone up over 700% in the last 5 years as the Navratna company is a major beneficiary of the government's focus on product localization and increasing defence capex . On the technical charts, BEL marked a high of Rs 340.50 in July 2024 and thereafter started marking a sequence of lower tops and lower bottoms.
"Recently, it has shaped an Adam and Adam Double Bottom pattern on the daily chart. The stock is currently hovering around the neckline of this pattern. Any sustainable move above the level of Rs 300 will lead to sharp upside rally up to the level of Rs 325, followed by Rs 340 level," said Sudeep Shah of SBI Securities.
( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel ).
