SMC’s five picks to beat market volatility ahead of RBI policy review
The volatility trend is likely to be choppy with large intraday swings and stock-specific movements will be the theme.
“Overall the market is waiting for new triggers from the coming RBI policy meet scheduled on 19th March, 2013. The Nifty has a strong buying support at 5800 levels, which is very crucial for bulls,” SMC said in a note.
According to data, on the index options front, a lot of option selling was seen in the 5700-strike put option, which had more than 1 crore shares in the open interest.
Among the call options, the highest open interest continued at the 6000 strike, with aggregate open interest of 78 lakh shares.
According to the brokerage, the Nifty is expected to remain in the range of 5800-6000 levels. The volatility trend is likely to be choppy with large intraday swings and stock-specific movements will be the theme.
SMC highlights five stocks to beat volatility in the markets:
Fundamental picks from 12-month time-frame:
Cummins India Ltd: Expects 18% upside; Target price at 592
Over the last few years, the company has reported steady revenue growth and is expected to continue with huge capex plan in the next few years. As regards to the export market, the company expects growth to be about 5-10 per cent in FY14. The brokerage expects the stock to see a price target of Rs 592 in one year time-frame on a one year average P/E of 22.06x on FY14 (E) EPS of Rs 26.83.
Jammu & Kashmir Bank Ltd: Expects 19% upside; Targets price Rs 1568
Considering the improving prospects, consistent growth in earnings is expected. The bank continues to deliver healthy performance on business growth and NIM. On the estimated book value of Rs 1205.77 for FY14E and target P/BV of 1.30x, the brokerage firm expects the stock to see a price target of Rs 1568 in one year time-frame.
Technical picks to beat near-term volatility:
HCC: Buy for a target of Rs 18-19, with a stop loss of Rs 15-16
The stock closed at Rs 16.25 on 15th March 2013. The stock made a 52-week low at Rs 14.65 on 04th March 2013 and 52-week high of Rs 29.80 on 14th March 2012.
The 200-day Exponential Moving Average (EMA) of the stock on the weekly chart is currently at Rs 32.97. On the technical charts, there is a basing at lower levels, which indicates reversal in the coming weeks.
Moreover, the stock has also formed a Japanese candlestick pattern called ‘hammer’ which signifies that there should be an aggressive buying with volumes. Both of these conditions indicate that it may reach our desired targets in the near term.
Investors can ‘buy’ the stock in the range of Rs 15-16 levels with closing below stop loss of Rs 14 levels for the target of Rs 18-19 levels
The stock closed at Rs 609.80 on the 15th March 2013. The stock made a 52-week low at Rs 490.35 on 16th March 2012 and 52-week high of Rs 631.95 on 10th September 2012.
The 200-day Exponential Moving Average (EMA) of the stock on the weekly chart is currently at Rs 434.38. Being the defensive scrip, it is still in its upward trend negating the volatile sessions of the broader index.
Last week, it remained positive despite weakness in all other counters, which signifies its potential to continue its upward momentum in near term.
One can ‘buy’ in the range of 595-600 levels with closing below the stop loss of 575 levels for the target of 650-660 levels.
Mahindra & Mahindra Ltd: Buy with a target of Rs 960-970, with a stop loss of Rs870
The stock closed at Rs 927.70 on the 15th March 2013. It made a 52-week low at Rs 621.10 on 18th May 2012 and 52-week high of Rs 976 on 19th December 2012. The 200-day Exponential Moving Average (EMA) of the stock on the weekly chart is currently at Rs 670.63.
As we can see on the chart, it is in uptrend, but after retracing from Rs 950 levels it made fresh buying pivot at Rs 850 levels and traded in a positive manner in the last few weeks, which determines its strength.
One can buy in the range of Rs 900-910 levels with closing below a stop loss of Rs 870 levels for a target of Rs 960-970 levels.
(The views and recommendations expressed in this section are the analysts’ own and do not represent those of EconomicTimes.com)