Stock Recommendations

SENSEX (26687) BSE Sensex opened negative as it lost around 200 points in the first half of the session hitting an intraday low of 26379 levels, but later it recouped from the lower levels on the back of buying in Banking and Auto sector stocks. Finally it settled the day with the gains of around 100 points. Now till it holds back above 26500 zones, it may continue to move towards 26800 then 28000 levels. However if it fails to sustain 26500 zone then the index may again get stuck in the selling pressure and drift down towards 26300 and 26000 levels. 

STOCK IN FOCUS

Aurobindo Pharma closed 3.3% higher in yesterday’s trade on above average volumes. The positive momentum was supported by 2 approvals in past 2 weeks of a combined market size of US$185mn. 

This is in line with management’s guidance of 20 approvals in FY16E in US. Besides, potential big ticket launches (penem, peptides and oncology) in FY16E/17E, investments in complex products (depot injections, micro-sphere technology) from FY18-20E will drive growth. 

Within the injectables space, it is investing in areas like depot injections, micro-sphere technology, peptides, oncology and hormones. Further, it is also developing products in other niche areas such as ophthalmology, respiratory, CS and penems as well as a couple of 505 b (2). 

This, along with levers such as high growth in US, consolidation of EU business and sustainable ARV segment can help it achieve sales of US$3bn by FY17E. 

We recommend a BUY on the stock with a Target Price of Rs.1,542.

INTRADAY PICKS

Siemens Ltd. (LTP: 1316) BUY For today's trade, long position can be initiated only in Rs.1300-1290 range for target of Rs.1360 with a strict stop loss of Rs.1278.

Biocon (LTP: 453) SELL For today's trade, short position can be initiated only in Rs.457-461 range for target of Rs.442 with a strict stop loss of Rs.465.

SUNPHARMA is moving after the sharp correction from 1010 to 811 levels and now has formed a strong support base at 810-815 levels. It is showing the reversal of the trend and looks attractive in terms of risk reward ratio. Its RSI is turning from the bottom level and also supporting the up move in the stock. Thus traders can buy the stock between Rs.824 to 832 with stop loss of 811 for the upside target of 862 levels.

MARUTI has been forming higher top - higher bottom formation on daily, weekly and monthly chart. The stock is turning from the support base of 3700-3710 levels formed recently and showing the early sign of trend reversal. It breached its 13 EMA with the RSI also supporting the up move. Thus traders can buy the stock between Rs.3715 to 3752 with stop loss of 3659 for the upside target of 3884 levels.

Technical Stock Recommendations

Hero MotoCorp witnessed decent rise from May month's low (512 points of jump from Rs2,226), but later reversed before visiting its long-term moving average (200-day SMA) and slipped to Rs.2,482. 

Later the stock found good support around its 50% Fibonacci Retracement level and managed to close above its short-term moving averages (i.e. 20-day EMA & 50-day EMA) firmly. 

Though average daily volume is the concern, we believe strong base formation and improvement in other daily technical indicators, such as Stochastic (5,3) and RSI (14,9) from there lower/key levels will help the stock to visit its 200-day SMA.

Thus, for today's trade, long position can be initiated only in Rs.2,520-2,500 range for target of Rs.2,750 with a closing based stop loss of Rs.2,420.