Stock Recommendations

SENSEX (27251) BSE Sensex opened positive and remained volatile in the early part of the day. However in the later part of the day buying activity emerged in the market on the back of 4 month lowest retail inflation of 4.87%. The index traded in side the bigger trading range of previous session and finally closed positive with a gain of 375 points. Now index needs to hold above 27300 levels to bounce back towards 27500 and 27800 levels while on the downside, support exists at around psychological 27000 and below that bears may drag the index towards 26800 levels.

STOCK IN FOCUS

Union Bank of India (UBI) closed 7.9% higher in trade yesterday. Amidst the challenging interest rates and macroeconomic regime, the bank has been delivering reasonable operating and asset quality performance. UBI posted a healthy growth of 60.9% yoy and 4.7% qoq growth in pre-tax profit led by higher treasury and core fee income. It has also contained the assets quality deterioration. Post the slower growth in the balance sheet in FY15, the management of the bank has guided that the growth will be calibrated in next few quarters, with special focus on growing lower risk weight assets. 

However, we expect some negative surprise on assets quality front in next two quarters, due to relatively slower pace in economic recovery. With most of the negatives priced in, the bank is trading at mere 0.6x FY16E and 0.5x FY17E P/Adj. BV.

We recommend BUY on the stock with a Target Price of Rs.204 (0.7x FY17E Adj. Book Value).

INTRADAY PICKS

Crompton Greaves (LTP: 173) BUY For today's trade, long position can be initiated only in Rs.169-167 range for target of Rs.180 with a strict stop loss of Rs.164. 

Havells India (LTP: 280) SELL For today's trade, short position can be initiated only in

Rs.288-292 range for target of Rs.275 with a strict stop loss of Rs.295. 

TATAELXSI is moving after taking support at its 50DMA and breaking out from the triangle formation on daily chart. It has been trading with positive bias from last three weeks even after sharp decline in the broader market thus indicating the strength in the stock. One can buy the stock between 1125 to 1135 with stop loss of 1110 for the upside target of 1185 levels.

DISHTV gave the highest daily close of last sixteen trading sessions and engulfed the weakness of previous session. It is slowly moving towards 35 DMA and showing the early sign of reversal after the recent correction from 85 to 71 levels. One can buy the stock between 76 to 78 with stop loss of 74 for the upside target of 83.5 levels.

Technical Stock Recommendations

Hindustan Petroleum reversed from all-time-high and slipped to three and half month low in very short span of time. Negative cross-over of 20-days EMA & 50-days EMA, falling RSI (14,9) and MACD (12,26,9) are also signaling weakness in the stock. Though our short-term technical view is negative, we believe any minor rebound from here will provide better risk reward opportunity to create fresh short position.

Thus, for today's trade, short position can be initiated only in Rs.610-620 range for target of Rs.525 with a closing based stop loss of Rs.645.