5 Stocks Hitting 52-Week High. What's Driving the Rally?

2023 - a year of new hopes!

After going through a blockbuster 2021 and a super flop 2022, investors were expecting 2023 to be a decent year...a year filled with new hopes.

However, it all went downhill as soon as US-based short seller Hindenburg issued a report on the Adani group.

The Adani-Hindenburg saga was followed by rising interest rates and the global banking crisis. One after the other, some event has kept the markets busy for the first three months of 2023.

But just like every cloud has a silver lining, there are stocks which continue to rise. These stocks go against the general market trend and come out on top.

In this article, we will talk about five such stocks. These stocks have rallied to hit their 52-week highs recently in a dull market sentiment.

#1 L&T

The first name on this list is L&T.

Larsen & Toubro, commonly known as L&T, is an Indian multinational conglomerate.

It operates in engineering, construction, manufacturing, technology, information technology, and financial services. The company is headquartered in Mumbai.

L&T share price hit its 52-week high of Rs 2,329.9 on 11 April 2023. In 2023 so far (up to 12 April), its share price is up 9.6%.

The engineering company has been in limelight on the back of repeat order wins and that too big ones. The company's share price hit a record high on Monday this week after it emerged as the lowest bidder for the redevelopment of the New Delhi railway station.

On the same day, it also bagged a significant order for its hydrocarbon business. The business secured an order under its AdVENT (Advanced Value Engineering and Technology) business vertical from Chambal Fertilisers and Chemicals.

In the last three months, L&T's orders have grown substantially boosting investor confidence.

The government's plans are to provide a significant thrust to the country's infrastructure development. The plan was aided by a budgetary allocation of a massive Rs 10 trillion (tn) capital investment plan of the government for the financial year 2023-24.

Right now, big orders and overall sectoral tailwinds are pushing L&T share price to a new peak. No wonder L&T is one of the top-performing stocks of March 2023.

For more details, check out L&T's factsheet and its quarterly results.

#2 ITC

Second on the list is ITC. You probably guessed this stock when you opened this article...that's how much the hype is surrounding the hotels to cigarette company.

ITC is India's biggest cigarette & one of the largest fast-moving consumer goods (FMCG) companies. It has a 78% market share in cigarettes and a presence in other business segments such as staples, biscuits, and personal care products.

The company is also present in the paperboard, printing, & packaging business.

ITC hit a 52-week high of Rs 398.2 on 11 April 2023. In 2023 so far (up to 11 April 2023), its share price has rallied 18.4%.

Imagine a big happy event that's about to happen in your life. You and the people surrounding you would be excited way before the event actually happens, right? Something like this is also happening with ITC shares.

Lately, shares of ITC are on the rise because of a strong business outlook. The market is expecting robust performance from ITC in the fourth quarter of 2023.

With softening of major commodity prices, FMCG companies have taken price cuts and grammage increases in the last six months. This is expected to result in a volume uptick in the January-March quarter. Being a majority market share holder an obvious benefit of this would be seen in ITC's quarterly results.

ITC has delivered a resilient performance in the past few quarters, despite an uncertain demand environment and sustained inflationary pressures on margins.

The resilient performance was driven by a good recovery in its core cigarette business steady double-digit growth in the non-cigarette FMCG business, and accelerated growth in the hotel and paperboard, paper and packaging (PPP) business.

ITC share price also received a boost from budget 2023. Finance minister Nirmala Sitharaman announced to increase in agriculture credit target by more than 11% on a YoY basis in the budget. This is expected to benefit agriculture-driven stocks like ITC.

Also, on 7 April 2023, ITC announced that it divested its entire shareholding of 26% of the paid-up share capital held in its joint venture company, Espirit Hotels. Consequently, Espirit Hotels has ceased to be the company's joint venture company.

For more details, check out ITC's factsheet and its quarterly results.

#3 Bajaj Auto

Next on this list is Bajaj Auto.

Bajaj Auto is an Indian multinational automotive manufacturing company based in Pune. It manufactures motorcycles, scooters and auto rickshaws. Bajaj Auto is a part of the Bajaj Group.

It is the world's third-largest manufacturer of motorcycles and the second-largest in India. It is also the world's largest three-wheeler manufacturer.

Bajaj Auto share price hit a 52-week high of Rs 4,305 on 12 April 2023. In 2023 so far (up to 12 April), its share price has rallied 19.9%.

The company was on the radar ever since it entered the much anticipated electric vehicle (EV) segment. The company has played the differentiation card in the EV game as it entered the premium segment.

The macro winds in the auto segment may keep the sales volume under pressure however premiumisation trend can act as a cushion.

The company is planning to sell 10,000 electric vehicle units per month eventually in the next 3-6 months, which is a significant target in India's growing EV market.

On 10 April 2023, it completed the transfer of Triumph's India sales and marketing operations to Bajaj Auto. The transfer is linked to an announcement made in 2020, where a strategic partnership was announced between the two companies, to create a new range of mid-sized Triumph Motorcycles.

The new range is expected to launch in 2023. Reportedly two bikes are already under testing. The street is bullish on Bajaj Auto on account of the impending launch of Triumph bikes.

For more details, check out Bajaj Auto's factsheet and its quarterly results.

#4 Siemens

Fourth on this list is Siemens.

Siemens is a pioneer in infrastructure facilities, digitalisation, and electrification in India. It is one of the world's largest producers of energy-efficient resource-saving technologies.

Siemens share price hit a 52-week high of Rs 3,400 on 10 April 2023. In 2023 so far (up to 12 April), its share price has rallied 17.9%. It is one of the top-performing large-cap stocks of 2023.

In budget 2023, the finance minister allocated Rs 2.4 tn for the railways sector which is the highest ever outlay for the sector. The increased focus of the government on the development of the railway sector is a blessing for Siemens.

The order book of the company has been growing because of the shift in government focus.

In January 2023, the company won the biggest-ever railway order. It won an order of around Rs 260 bn. It includes an order of 1,200 locomotives from the Indian railways. These 1,200 locomotives will be delivered over the period of 11 years followed by a maintenance period of 35 years.

The railways sector is witnessing big changes as the government became more transparent and driven toward modernisation and electrification of railways. The management of Siemens intends to be a part of this process of developing an efficient railway sector and in return gain big orders.

The focus of the government with the PLI scheme is on semiconductors, batteries, etc, and these are areas where Siemens is present, both in its technologies as well as in the software offerings.

Thus, Siemens is all set to play the upcoming railway capex theme.

For more details, check out Siemens' factsheet and its quarterly results.

#5 UltraTech Cement

Last on this list is UltraTech Cement.

UltraTech Cement is the largest manufacturer of grey cement, ready-mix concrete (RMC) and one of the largest manufacturers of white cement in India.

UltraTech Cement hit its 52-week high of Rs 7,792.1 on 11 April 2023. In 2023 so far (up to 12 April), its share price has rallied 9.4%.

The rally is driven by tremendous sales volume. The company has achieved 100 million tonnes of production, dispatches, and sales in the financial year 2022-23. Its consolidated sales rose by 12.4% to 105.7 m tonnes (MT) in the said financial year.

Last month, the cement major announced the commissioning of a 1.3 MT per annum brownfield cement capacity at Hirmi in Chhattisgarh and a 2.8 MT per annum greenfield grinding capacity at Cuttack, Odisha.

Lately, cement stocks have been under pressure because of rising input costs. The company's profits were sinking due to high power and fuel costs. The price of input materials like coke and pet coke was also on the rise.

However, cement prices increased in February 2023 which gave a big boost to the company's share price.

The Aditya Birla group company is not out of the woods yet as fuel prices or energy costs are likely to remain elevated for the next couple of months. Pet coke prices may also continue to rise.

However, strong demand in the cement sector may wipe off the negatives of rising prices. Cement manufacturing companies are expected to do well for the next few years on the back of better demand prospects led by infrastructure and housing sectors, heightened industry consolidation, and regulatory changes in the allotment of limestone blocks.

Factors such as continuous gain in market share, timely capacity expansion, and high capacity utilisation, are likely to provide the company with an edge over its peers.

For more details, check out UltraTech Cement's factsheet and its quarterly results.

Investment Takeaway

Stocks trading at 52-week high are often considered attractive. Investors expect these stocks to continue their momentum for some time and rally some more because of the tailwinds they enjoy .

However, investors should be equally careful. Stocks hitting 52-week high may or may not be trading at expensive valuations.

Also, the bright prospects driving the rally for the moment may soon drizzle out when the market sentiment changes for the worse. In that case, these stocks are no longer attractive.

In conclusion, rather than focusing more on the price action, your ultimate focus should be on the fundamentals and valuations.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...