Stock Recommendations

SENSEX (28885) BSE Sensex opened gap up by 151 points and witnessed a roller coaster session as it was swinging between negative and positive territory. After recording an intraday low of 28622 levels it gained its momentum in the last hour recorded an intraday high of 28906 levels and finally closed with the gain of () points. Now, it has to hold above 28800 levels to continue the buying interest towards 29000 and 29250 levels

while on downside immediate support exists at around 28500 and 28250 levels. 

STOCK IN FOCUS

Hero MotoCorp has corrected by over 15% since the beginning of the calendar year primarily as the company has seen volumes tapering due to slowdown in rural sales. We believe that the correction in the stock is overdone and should be used as an entry opportunity. We continue to highlight Hero as our key pick, as we believe that despite rural slowdown, the company would be able to post above industry growth driven by new launches, especially in the scooters category. 

Furthermore, we estimate EBITDA margins to post a dramatic improvement of 340bps from 11% in FY14 to 14.8% in FY17E as the company benefits from cost saving programs and royalty departure. Trading at just 13x our FY17E earnings, the stock does not capture in the robust 25% earnings growth expected between FY14-17E. 

Thus, we recommend a Buy on the stock with a DCF-based Target Price of Rs.3,749 share.

INTRADAY PICKS

DRREDDY (LTP: 3740) BUY For today's trade, long position can be initiated only in Rs.3710-3690 range for target of Rs.3800 with a strict stop loss of Rs.3670.

LICHSGFIN (LTP: 461) BUY For today's trade, long position can be initiated only in Rs.454- 450 range for target of Rs.468-472 with a strict stop loss of Rs.447. 

ASHOKLEY has been making higher top – higher bottom formation on weekly and monthly chart and set to start next leg of rally. The stock is moving after the consolidation of last six trading sessions with rising trading and crossed its hurdle of 75.50 and gave the highest daily close. It looks attractive to see the up move towards 77.50 and higher levels.

Thus, traders can buy the stock between 73-77 with stop loss of 71.50 for the upside target of 77.50 levels

Positional Stock Recommendations

Yes Bank, has been consolidating between levels of Rs895 to Rs780 since past three months. Over last few trading sessions, we have seen sudden pick up in volumes for the stock while at the same time, both MACD and RSI have given positive crossover and is indicative of short term up move in the offing. On downside, stock has multiple support in the range of Rs.800 to 780 while on the upside, any close above the short term hurdle of Rs.895, we may see stock moving towards level of at least Rs.940/1,000.

Thus, for today's trade, long position can be initiated only in Rs.820-800 range for target of Rs.940 with a stop loss of Rs.775.