6/8/2019 The NBFC Crisis Is a Breeding Ground of Opportunities - Profit Hunter Pro

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The NBFC Crisis Is a Breeding Ground of Opportunities

Jun 7, 2019

Front pages of most business newspapers are filled with one stock over the last two days - Dewan Housing
Finance Ltd (DHFL). The company missed its interest payment of Rs 960 crore on a set of outstanding bonds
on Tuesday.

Alert

Nesco Ltd. achieved our target price of 550 in the last few seconds of trade. We close this trade with
gains of 13.75%. Congrats.

This forced the mutual funds who were investors in these bonds to mark down their Net Asset Value (NAVs)
yesterday.

Mutual funds holding debt of DHFL suffered one of their worst single day losses. The NAVs of several debt
schemes fell anywhere in the range of 6-53% reflecting the marked-down value of their holdings in DHFL's
bonds.

The DHFL saga began back in September 2018 with DSP Mutual Fund's selling of commercial paper of DHFL
worth Rs 300 crore in the secondary market at a yield of 11%. The sale of commercial paper at higher yield and
lower prices triggered liquidity concerns which sent the stock spiraling down by 55% within an hour.

DHFL is currently down 75% even after considering the 55% fall of September. It seems the trouble for the
stock are un ending. Nevertheless, it's not alone. Many Non-Banking Finance Companies (NBFC's) are facing
the heat now.

But it would be wrong to paint all the companies with the same brush. Back in September 2018 markets were
doing the same thing with housing finance companies but some of them have proven everyone wrong and
generated fabulous returns.

Do check out the 5 must see charts note I published on them on 21st September 2018 and you will know what I
am talking about.

The world is once again seeing a crisis in the NBFC space but that's where opportunity also lies. Now today I
want to focus on some of these NBFC's in our very own style 'more visuals and less words' and figure out
where the next opportunity is coming from.

1. Shriram Transport Finance is trading in a tight range of 300 rupees over the last few months. The lower
end of this range is placed at 1,020. This level could lend support to the stock in case of a fall.

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2. Piramal Enterprises Ltd. is trading in a broad range of 2,000 to 3,000 over the last 2 years. The stock is
currently placed just above the lower range support. If the stock manages to build a base around these levels
then it could bounce back soon.

3. Indiabulls Housing Finance also witnessed a sharp fall along with DHFL back in September 2018. It halved
from a level of 1,200 in August 2018 to a level of 600 in October 2018. Now the stock is trapped in the lower
end of this broad range between 600 to 900. The stock is likely to trade choppily until it breaks out on either
side of this range.

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4. HDFC Ltd. was trading in a broad range 1,630 to 2,030 over the last 2 years. Most of the trading could be
split in to two equal halves of 200 rupees each. The stock traded in the upper half of this range between
1,830 to 2,030 over the last six months. It broke out with a gap up on the day exit polls were announced and
never looked back. Now the stock has already moved up by 200 rupees in three weeks and seems like it
could cool off a bit before moving up.

5. IDFC Ltd. is in a long-term downtrend. So, it wouldn't have paid much if you are holding it for a long time.
However, if you can get in at the cycle lows and exit near the tops then it could generate decent gains for you.
As of now it seems like the stock is placed closer to one such cycle low. The level of 34 has acted as support
as well as resistance on multiple occasions. It seems like the same level could protect the bulls this time
around as well.

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I may sound like a broken record but I would still repeat the age-old wisdom of Buffett - be greedy when others
are fearful. Right now, market participants are fearful of the crisis in NBFC space. However, such a crisis is a
breeding ground of opportunities. You can profit from it if you know how to find them.

Thankfully, you don't have to worry much as I will bring these opportunities to you as soon as I spot them. So,
keep on reading the Pro t Hunter Pro and stay tuned.

Warm regards,

Apurva Sheth
Editor and Research Analyst, Pro t Hunter Pro

PS: Get 6 Stocks With 10X Potential you could consider buying BEFORE the Modi wave enters the stock
market...by joining Rahul Shah for his online summit - The 10X Project - on 11th June at 5 PM (IST).

Trading Notes

Balkrishna Industries bounces back from support.

Mayur Uniquoters ends marginally lower.

Tata Elxsi jumps.

Nesco Ltd. achieved our target price of 550 in the last few seconds of trade. We close this trade with gains of
13.75%. Congrats.

Indian Hotels ends down by half a percent.

Further Reading

Here's how we've performed in May and our plan to trade in June 2019. [Read More]

Top Recommendations

Buy Balkrishna Industries. Monday, June 3, 2019

Trade Alert: Re-Entry Opportunity in This Smallcap Turned Bluechip

Buy Mayur Uniquoters. Friday, May 24, 2019

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6/8/2019 The NBFC Crisis Is a Breeding Ground of Opportunities - Profit Hunter Pro

Trade Alert: 3 Stocks to Buy in Modi 2.0 Era

Buy Tata Elxsi. Friday, May 24, 2019

Trade Alert: 3 Stocks to Buy in Modi 2.0 Era

Buy Indian Hotels Ltd Tuesday, March 12, 2019

2 Trading Opportunities in Fundamentally Strong Companies

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