Stocks Recommendations

SENSEX (26717) BSE Sensex tripped around 824 points from the intraday high of 27501 levels and settled near to the day’s low levels. The bears were in full swing throughout the day and made index to breach its psychological 27000 level. The index witnessed significant selling pressure which was led by fall in capital goods, realty, power and oil & gas indices. Now index needs to cross and hold above 26800 levels to bounce back towards 27000 and 27500 levels while on the downside, support exists at around 26500 and below that bears may drag the index towards 2625 levels

STOCK IN FOCUS

Torrent Pharma bucked the huge negative trend in the market yesterday to end the day with a 1.6% gain supported by 2x its 2- week average volumes. The optimism towards the stock was supported by the news that the company is set to acquire Zyg Pharma for an undisclosed amount and will be funded through internal accruals. This acquisition is in-line with the management's strategy to add new therapies in its product portfolio especially for US and EU. We like Torrent's strategy of filling the portfolio gaps with specialty products. Given the generic product pipeline, we expect the acquisition to have cost Torrent ~Rs2bn. It currently has cash balance of Rs.6bn with D/E ratio of 0.9x in FY15E. 

We remain positive on the core business growth of the company and have a BUY recommendation on the stock with a Target Price of Rs.1,400.

INTRADAY PICKS

ADANI PORT (LTP: 331) SELL For today's trade, short position can be initiated only in Rs.336- 339 range for target of Rs.322 with a strict stop loss of Rs.342.

HCLTECH (LTP: 891) BUY For today's trade, long position can be initiated only in Rs.870-860 range for target of Rs.895 with a strict stop loss of Rs.850.

PETRONET is forming higher lows from last seven trading sessions and gave the perfect example of v shaped recovery on the daily chart. It has managed to hold its gains even after sharp decline in the broader market thus showing the strength in the stock to move towards 180 and higher levels. Traders can buy the stock between 170-174 with stop loss of 169.50 for the upside target of 180 levels.

HINDALCO is showing an early sign of trend reversal and turning from the lower band of trading range. It is moving after taking support at its 50 DMA. It looks attractive in terms of risk reward ratio as it is moving after long consolidation, sharp correction and holding the gains even after sharp decline in the broader market. Traders can buy the stock between 130-135 with stop loss of 131 for the upside target of 140 levels. 

Technical Stock Recommendations 

Tata Power ended yesterday's trade on a weak note, down 3.5% with sharp increase in volumes. The stock continues to trade in the falling channel with strong resistance in place around level of Rs78. Over and above the same, short term averages are also placed in the range of Rs79 to Rs80. MACD below the neutral zone combined with RSI below 50 mark indicate continuation of current weakness in the stock. Thus any bounce back in near term should be used to short the stock for short term gains.

Thus, for today's trade, short position can be initiated only in Rs.76-78 range for target of Rs.70 with a stop loss of Rs.80.5.