Stock to watch: ICICI, HDFC Bk, SBI, IDFC

The markets overcame political jitters to post a stellar rally powered by short covering. The indices surged ahead in late trade. The Nifty closed at 4,092 up 145 points, while the Sensex shut shop at 13,635 up 524 points.

Gaurang Shah of Geojit Financial Services is positive on Ciba India and International Combustion. According to Shah, with the kind of momentum that we have seen on Wednesday and Thursday, we have seen a good amount of buying come in, and today that rally has continued. "Today's rally is somewhat soothing despite the fact that it has come in the latter half of the day. Investors were expecting a correction to seep into the markets as nobody would want to carry positions overnight. Also, Monday and Tuesday will be full of incidents."

"If someone would want to hunt for the bottom that we saw yesterday, a tad below of 3,790 would be the one that all of us were searching for. So, let's not hope that there is too much of upside or downside from here."

He feels the good feeler is crude which has slipped a tad below USD 130 per barrel.

Here's how Gaurang Shah views the stocks on board:

On Ciba India:

Investors buying with a horizon of above one-year can pick this stock as returns will spill over a period of time. The company has got three major business verticals ‑ plastic additives, coating effect chemicals, and water and paper treatment chemicals. There has been significant demand in all these three verticals. With the amount of investment by large corporate houses, these three verticals or segments are quite robust.

There has been around 20-25% growth on a YoY basis. The water treatment segment looks to be very encouraging and promising in the near future since there is tremendous shortage across the sub-continent.

The parent's focus on the growing Indian market is set to rise over a period of time, which will translate into increasing outsourcing to Ciba India. From that point of view, we have a price target of around Rs 400. The stock is currently quoting Rs 184. It will not be difficult for it to achieve a target of Rs 400 in 12-18 months.

On International Combustion:

Our price target on this stock is around Rs 500, it is currently quoting around Rs 290. The company is into material handling and manufactures gearboxes. It caters to a huge segment as far as products for material handling are concerned. Also, the kind of growth that we have seen is quite robust. With the kind of specialized product range that it has got and given the fact that most corporates are going ahead with their capex plans, they will require all these materials manufactured by International Combustion.

E Mathew, Director, Mathew Easow Fiscal Services, is positive on ICICI Bank, HDFC Bank, SBI, IDFC and Gujarat NRE Coke.

Here's how E Mathew view the stocks on board:

On ICICI Bank:

ICICI Bank is still looking strong. The stock has got strength to possibly cross the stiff resistance zone of Rs 625-630. Once it is able to take out Rs 625-630, we should possibly see an upmove to around Rs 680, but we will have to carefully monitor the move there.

On HDFC Bank:

HDFC Bank looks interesting though it has moved very smartly in the last two days. The stock has the ability to go to around Rs 1,080, which is a tough resistance zone.

On State Bank of India:

Market leader State Bank of India has been a slow mover, but there is still steam in the stock. A possible target could be around Rs 1,350.

On IDFC:

With the sort of downtrend that IDFC has seen, this could be an inflection point for it, because it takes very good support at around Rs 90-92. Rs 117 is a strong resistance zone for this stock. If it is able to break Rs 117 levels, we could see it rallying all the way to Rs 140. However, one has to be very careful around that stiff resistance zone.

On Gujarat NRE Coke:

Gujarat NRE Coke was a bit of an underperformer. If one has a little bit of patience, one could accumulate it around Rs 95-98. If this stock is able to maintain above Rs 110 and Rs 112, then it could climb all the way to Rs 134.

On JP Associates:

I would advocate a sell even though it is participating in the rally because the stock doesn't look like it is out of its major downtrend. At best, one could look for a target around Rs 175-178. At higher levels, I would advocate exiting this stock.

On Satyam:

A section of the market is quite gung-ho on technology. If you look at the charts, Satyam has got a decent support around Rs 380-385, which is a critical zone. If that breaks, Satyam could dip to as low as Rs 360. All this is happening on a day when we have seen a fine rally on the Nifty. Even if you look at Infy's chart, at best you could see something like a pullback rally. Even though the rupee is supporting these companies, you have this sort of behaviour which is quite disturbing. What is even more disturbing in the case of Satyam is the support of Rs 360-364. I wonder whether it would really hold this time.
 

E Mathew disclosure:

It is safe to assume that my clients and I may have an investment interest in the stocks or sectors discussed.