Short & Medium Term Stock Recommendations

SENSEX(28192) BSE Sensex opened positive and witnessed a choppy trade for most part of the day then it fell down post lunch hours in the negative zone towards 28163 levels. It has been witnessing sustain selling pressure at every bounce back and not showing any sign of recovery. It finally settled the day with the loss of 70 points. Now index needs to cross and hold above 28500 levels to bounce back towards 28800 and 29000 levels while on the downside, support exists at around 28000 and below that bears may drag the index towards 27850 levels

Stock In Focus

SRF ended with a gain of 1.5% in yesterday’s weak market, supported by above average volume. SRF is progressively moving towards a high margin specialty chemicals business reflecting structural change in the company’s business landscape. 

We expect its chemical business to sustain high growth trajectory leading to improvement in its revenue contribution from 24% in FY14 to 34% in FY17E.  Consequently, we expect the changing mix to deliver higher blended EBITDA margins of 19.5% in FY17E from 12.6% in FY14, which will enhance PAT margins from 4.0% in FY14 to 9.1% in FY17E.

Coupled with this, an expected cyclical recovery in packaging business could add thrust to overall growth and margins. 

We expect SRF to post a high CAGR of 29% and 46% in EBITDAand PAT respectively over FY14-17E. Thus, we reiterate our BUY recommendation on the stock with a Target Price of Rs.1,150.

INTRADAY PICKS

DABUR (LTP: 269) BUY For today's trade, long position can be initiated only in Rs.264-261 range for target of Rs.275 with a strict stop loss of Rs.258. 

ZEEL (LTP: 350) BUY For today's trade, long position can be initiated only in Rs.344-340 range for target of Rs.355 with a strict stop loss of Rs.338. 

HAVELLS has been forming higher highs - higher lows from last four weeks and crossed and closed above its major hurdle of 303 levels. It has managed to hold the gains even after selling pressure being witnessed in the broader market thus showing the potential to move towards 321 and higher levels. 

Traders can buy the stock with stop loss of 300 for the upside target of 321 levels. 

M&MFIN is turning from the lower band of the trading range as it has been consolidating from last seven weeks and made support base near to 245 zones. It has been forming higher lows from last nine trading session and closed near to its 50DMA. Now it has to hold above 265 zones to give the upside breakout towards 271 and 280 zones. 

Traders can buy the stock with stop loss of 255 for the upside target of 271

levels. 

Positional Stock Recommendation

Bharat Petroleum faced stiff hurdle around Rs790 from last couple of months, wherein stock has witnessed a decline of 10%-20% post visiting that level. We believe stock will remain in pressure till the time it trades below that line. Stock is trading below its short-term moving averages (i.e. 20-days EMA & 50-days EMA), which are slopping downwards and negative cross-over in Stochastic (5,3), RSI (14,9) & MACD (12,26,9) are also signaling near-term weakness.

Thus, for today's trade, short position can be initiated only in Rs.740-760 for target of Rs.660 with a strict stop loss above Rs.790.