Stocks Trading Recommendations

SENSEX (27491) BSE Sensex opened on a strong bull note and negated the trend of negativity of last couple of trading sessions. The index throughout the day traded in positive territory led by a strong rally in most of the sectorial indices and support base buying in beaten down counters. It finally ended the day in handsome gain of 1.7%. 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 psychological 27250 levels.

STOCK IN FOCUS

Canara Bank closed 2.8% higher, outperforming benchmark Bank NIFTY by 0.9%, as the bank reported strong growth in 3QFY15 profit (+4.6% qoq; +60.2% yoy). We expect the bank’s operational and financial performance to be positively impacted by the fall in benchmark g-sec yield along with latest regulatory development on flexible structuring of project loan to infrastructure and core sector. Canara Bank has excess SLR holding of more than 6%, which is expected to result into higher treasury profit in the coming quarters. Further, the bank will be major beneficiaries of RBI’s flexible restructuring norms for the existing project loan as stress assets formation will reduce substantially. It will also set aside worries related to higher slippages from existing restructured loan book. The banks have total exposure of 20% of advance to infrastructure sector. 

At current levels with most negatives priced in, the stock is trading inexpensive at a mere 0.62x FY16e and 0.55x FY17e adjusted P/BV. We have a BUY on the stock with a Target Price of Rs.520.

INTRADAY PICKS

ANDHRA BANK (LTP: 79.55) BUY For today's trade, long position can be initiated only in Rs.78-77 range for target of Rs.82 with a strict stop loss of Rs.76. 

TCS (LTP: 2,482) BUY For today's trade, long position can be initiated only in Rs.2,460-2,450 range for target of Rs.2,520 with a strict stop loss of Rs.2,440. 

DCB has been moving upwards from last four sessions and trading at the verge of a strong price breakout zones. It has given highest daily close in last five months and holding above 125 zone may start the next leg of rally which may take it to 130-135 zones. It is holding the gains even after the sharp market correction and trading above all the short and long term moving averages. One can buy the stock between 120 to 123 with stop loss of 119 for the upside target of 128.50 levels.

RECLTD is turning from the lower band of the recent trading range and may attract support base buying interest as its near to it's oversold territory. It usually takes multiple supports near to 310 zones and turns back to higher levels. We are expecting it to repeat the same price behavior so one can buy the stock between 310 to 315 with stop loss of 309 levels for the upside target of 325 levels.

Technical Stock Recommendations

HDFC Bank, although ended yesterday's trade on a positive note, selling pressure was clearly reflected in the stock at higher levels. As mentioned earlier, stock faces strong hurdle now in the range of Rs1,020 to Rs1,040 that is seen as short term resistance for the stock. On other hand, long term support in the form of 200 day simple moving average that is placed at Rs940 continues to act as a strong support for the stock on downside. Both MACD and RSI continue to depict the weak trend in the stock. Even while doing a peer comparison, stock continues to depict the weakness, with strong resistance at higher level.

Thus, short position can be initiated only in Rs1,020-1,040 range for target of Rs940 with a stop loss of Rs.1,055.