Stock Recommendations

SENSEX (26599) BSE Sensex opened flat with negative bias and continued its previous day’s negative movement. The index is in bears grip from last four weeks and also making lower highs lower lows pattern on daily chart which is indicating further negative trend. Now index needs to cross and hold above 26800 levels to bounce back towards 27000 and 27250 levels while on the downside, support exists at around 26500 and below that bears may drag the index towards 26250 levels.

STOCK IN FOCUS

Despite a weak market, KEC International closed 3% higher in trade yesterday on the back of strong 4QFY15 numbers. Higher growth in PAT in 4QFY15 (up 83% yoy) was led by better executions coupled with margin improvements. Company has secured new orders in Transmission & Distribution and Cables Businesses amounting to Rs14.6bn. Outstanding order book currently is at Rs103bn. We expect strong order inflows to continue in power T&D. SAE Towers continued to report losses in 4QFY15. However, we expect SAE to report profits on the back of higher margins in FY16. We expect margin improvements to continue, as legacy orders are nearing completion and new orders are coming in at better margins, which will improve profitability in FY16-17E. 

At CMP, KEC trades at 8.0x FY17E earnings. Valuations are attractive in our view. Thus, we recommend a BUY on the stock with a Target Price of Rs.136.

INTRADAY PICKS

TATA MOTORS (LTP: 488) SELL For today's trade, short position can be initiated only in Rs.498-502 range for target of Rs.480 with a strict stop loss of Rs.506. 

WIPRO (LTP: 538) BUY For today's trade, long position can be initiated only in Rs.532-528 range for target of Rs.550 with a strict stop loss of Rs.524. 

ITC is moving after taking multiple supports on daily, weekly and monthly charts and looks attractive in terms of risk reward ratio. It managed to hold the gains even after sharp decline in the broader index. So traders can buy the stock between 312 to 316 with stop loss of 309 for the upside immediate target of 328 levels.

Technical Stock Recommendations 

Ashok Leyland, continues to trade in the declining channel with strong resistance observed around level of Rs70 while at the same time stock has a support around level of Rs62. Negative crossover in short term averages combined with failure to move past the same during the previous reversal from long term averages make stock prone to further decline. MACD continues to trade below the neutral zone while the RSI below 50 mark suggest weakness in the stock. On down-side, 200 day simple moving average is placed around level of Rs53 which can be seen in case stock closes below level of Rs62.

Thus, for today's trade, short position can be initiated only in Rs.68-70 range for target of Rs.62 with a stop loss of Rs.72.