SENSEX (27105) BSE Sensex opened with gap up of around 200 points and negated its negative movement of last three sessions. The bulls dominated the bears throughout the session. The index rebounded itself from the lower levels showing the early sign of trend reversal, driven by the government’s decision to refer MAT issue to a high-level committee. Now index needs to hold above 27100 levels to bounce back towards 27250 and 27500 levels while on the downside, support exists at around 27000 and below that bears may drag the index towards 26800 levels.
STOCK IN FOCUS
Polaris closed 5.5% higher on Friday, beating sectoral index and benchmark index by 5% and 4%, respectively. While its 4Q results announced last week were muted, Polaris' dividend payout increased substantially (DPS of Rs15 for FY15 implying a payout of 90%). We continue to remain positive on Polaris as growth is expected ahead on new logo wins (24 new clients added in FY15 as compared to 11 additions in FY14) with focus
on digital solutions and large pipeline (commensurate with management’s outlook). We also expect margins to start trending higher from the current levels.
We expect Polaris to post revenue/EPS CAGR of 6.5%/15.6% over FY15-17E and we’ve
factored EBITDA margin at 12.6%/14.4% for FY16E/17E. We get valuation comfort from growth acceleration over FY15-17E (as compared to flat-to-negative growth in the prior 2 years period) and with higher payout.
We have a Buy on the stock with target of Rs180.
INTRADAY PICKS
TATA STEEL (LTP: 367) BUY For today's trade, long position can be initiated only in
Rs.365-362 range for target of Rs.380 with a strict stop loss of Rs.359.
WIPRO (LTP: 541) BUY For today's trade, long position can be initiated only in Rs.532-528 range for target of Rs550 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 had managed to hold the gains at support zones and moving upside with rising trading volumes. So traders can buy the stock between Rs.320 to 325 with stop loss of 317 for the upside immediate target of 336 levels.
YESBANK is in bull trend from last one year and usually starts its next move after a small price or time correction. Recently it corrected from 854 to 788 levels but overall trend is intact to positive which may again drive the upswing in the stock. Thus looks attractive in terms of risk reward ratio. Traders can buy the stock between Rs.810 to 815 on small decline near to support zone with stop loss of 798 for the upside immediate target of 852 levels.
Technical Stock Recommendations
Divis Lab, witnessed sharp sell-off from levels of about Rs2,000 to recent low of about Rs1,675 in past two months. This has helped stock to move out from the overbought zone. Definitely, with MACD below the neutral zone and RSI below 50 mark indicates weakness in the stock, long term trend line support on daily chart makes it an ideal candidate for short term bounce.
Thus, for today's trade, long position can be initiated only in Rs.1,690-1,650 range for target of Rs.1,800 with a stop loss of Rs.1,630.
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