Stock Recommendations

SENSEX (26833) BSE Sensex opened positive and continued forming higher highs – higher lows price pattern formation of last two trading sessions. It traded in the green zone on the back of buying in blue chip securities and managed to protect its 26800 levels. Finally, it settled the day with the gains of around 145 points. Now till the index continues to sustain above 26800 levels a further move towards 27000 then 27200 can be expected. However, if it fails to hold the support zone of 26800 then profit booking may drag the index towards 26500 levels. 

STOCK IN FOCUS

JSW Steel closed 3% higher yesterday supported by 3x its 2- week average volume. As per reports, the Ministry of Steel has increased import duty on carbon steel, from 7.5% to 10% for flat products and 5% to 7.5% for long products. 

This is a positive development as this may help domestic steel players increase prices, which have steadily declined over the past year by ~Rs6,500/tonne to ~Rs34,250 currently on the back of a fall in International prices and a sharp surge in cheap imports. 

As far as JSW Steel is concerned, while 1QFY16E is expected to remain subdued on the back of lower steel prices and high cost iron ore inventory, the balance part of the year should see a recovery in spreads on the back of lower input costs and firm steel prices. 

We have a BUY recommendation on the stock with a Target Price of Rs.1,314.

INTRADAY PICKS

Siemens Ltd. (LTP: 1321) 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.

Colgate Palmolive Ltd. (LTP: 1,960) BUY For today's trade, long position can be initiated only in Rs.1,940- 1,930 range for target of Rs.1,990 with a strict stop loss of Rs.1,915. 

Technical Stock Recommendations 

Dr. Reddys Lab found good support around its long term moving average (200-day SMA) and May month's low, where stock managed to limit the loss and with relatively better volume closed on highest level in last five trading sessions. We believe downside risk is very less for the stock, as rise in, Stochastic (5,3) from oversold zone and RSI (14,9) from 30-mark are indicating short-term reversal.

Thus, for today's trade, long position can be initiated only in Rs.3,320-3,300 range for target of Rs.3,550 with a closing based stop loss of Rs.3,200.