Stocks Recommendation

SENSEX (27440) BSE Sensex opened on a positive note with gap up of around 70 points and witnessed intraday swings as it snapped the morning gains in the second half of the trading session and fell down towards 27338 levels. The index failed to continue its relief rally of previous session and closed in negative region with a loss of 50 points. Now, it has to cross and hold its 27500 levels to witness bounce back move towards 27750 and

psychological 28000 levels while on downside immediate support exists at around 27250 levels.

STOCK IN FOCUS

Hindustan Zinc closed 6% higher on 1.3x its 2-week average traded volume and outperforming the CNX Metal index by 3%. Zinc prices on the LME have increased by 8% on an YTD basis and is up ~19% from the recent low of US$1,985/tonne hit in mid march this year, currently trading at US$2,355/tonne. It must be noted that zinc is the best performing base metal on an YTD basis and we estimate the market to be in deficit over the next 2- 3 years, which will support strong prices. Zinc inventory on the LME has also fallen drastically to 0.47mn tonnes (11 days of CY15E consumption) at the end of April 2015 from ~0.8mn tonnes a year ago and 0.7mn tonnes at the start of the calendar. 

At the CMP, the stock trades at 4.6x FY17E EV/EBITDA and 9.5x P/E. We recommend a BUY on the stock with a target price of Rs.209.

INTRADAY PICKS

LICHSG (LTP: 442) SELL For today's trade, short position can be initiated only in Rs.450-454 range for target of Rs.432 with a strict stop loss of Rs.457.

TCS (LTP: 2,482) BUY For today's trade, long position can be initiated only in Rs2,460-

2,450 range for target of Rs.2,520 with a strict stop loss of Rs.2,440. 

ESSEL PROPACK is moving after the long consolidation of last seven months and formed a support base at 115-120 zones. It is trading above its moving averages and looks attractive for the upside target of 134 and higher levels. One can buy the stock between 125 to 127 with stop loss of 120 for the upside target of 134 levels.

Technical Stock Recommendations 

JSW STEEL, ended yesterday's trade on a positive note up by about 3.8%, while in past few days stock has also created strong bottom around lower levels of Rs920-930. Even at current juncture, stock continues to trade in the falling channel with support far lower at Rs820 while resistance is observed around levels of Rs1,030. MACD continues to remain above the neutral zone while at the same time RSI above 50 mark indicates strength in the stock. We assume till the time now stock stays above level of Rs925, it has potential to once again re-test higher level of Rs1,030. Any close above the same will be extremely positive for the stock.

Thus, for today's trade, long position can be initiated only in Rs.955-935 range for target of Rs.1,030 with a stop loss of Rs.918