Stock Recommendation

Sensex (27459) BSE Sensex opened gap up and surged almost 300 points. However the euphoria died out in seconds as index erased all its gains on the back of a fresh round of selling in Realty, Pharma, FMCG and Energy sector stocks. It ended the day on a flat note with war clouds over Yemen and absence for fresh triggers keeping the bulls on the back foot. Now index needs to move back above 28000 zones to bounce back towards 28250 and 28500 levels while on the downside, holding below 27500 may drag the index towards 27250 and 27000 levels.

STOCK IN FOCUS

DCB Bank closed 5.9% higher, outperforming the NIFTY by 6%. We expect visible improvement in asset quality of the bank along with subsiding worries over its growth outlook. The bank is in the process of converting itself into a diversified financial player with a larger operational landscape from a regional player. 

We believe DCB is well placed for growth given its improved under writing skills, stringent risk management practices, stable asset quality and well-defined management objectives. 

We expect its loan book CAGR at 23.5% and PAT CAGR of 20.5% (after adjusting for higher effective tax rate of 30.5% in FY16/17 v/s 0% in FY14) over FY14-FY17E.  This justifies some valuation premium compared to some of its peers. 

At current levels, the stock is trading at a 1.9x FY16E and 1.6x FY17E Adjusted P/BV. We recommend a Buy on the stock with a Target Price of Rs134.

INTRADAY PICKS

BPCL (LTP: 750) BUY For today's trade, long position can be initiated only in Rs.730-725 range for target of Rs.770 with a strict stop loss of Rs.719. 

HINDALCO (LTP: 134) BUY For today's trade, long position can be initiated only in Rs.129-126 range for target of Rs.137 with a strict stop loss of Rs.125. 

ASHOKLEY has been making higher top and higher bottom formation on weekly and monthly chart and set to start next leg of rally after the recent price and time correction. The stock has recently fallen down from 76 to 67 levels and now taken support near to 50 DMA. It looks attractive to see the up move towards 71.50 levels and higher levels. Thus, traders can buy the stock with stop loss of 65.50 for the upside target of 71.50 levels. 

SIEMENS is holding the gains and slowly moving upwards even after the recent market decline. it has taken multiple support near to 1340 zone and also given highest daily closing in last 7 trading session. The stock is trading above all the short and medium term moving averages which also support our positive view on the stock. Thus, traders can buy the stock with stop loss of 1338 for the upside target of 1407 levels. 

Positional Stock Recommendations 

TATASTEEL closed Friday's trade on a weak note as it declined close to 0.2%. As mentioned earlier, the stock continues to remain under the bear grip and we do not see any reasons for the stock towitness any change in trend in short term. 

From current level, stock has two major resistances in the range of Rs.335 to Rs.360. On the downside, in case of breakdown below Rs.300 we anticipate stock to move close to probable support zone of Rs.280-270.

Thus, for today's trade, short position can be initiated only in Rs.335-345 range for target of Rs.280 and then Rs.270 with a stop loss of Rs.362.