Bargain buys? RIL, ZEE Entertainment could give 20% return in the next 6 months

It seems that nationwide lockdown has not much impacted the fertilizer sector. In May 2020, the Indian Fertiliser industry has witness sales growth of 25% to 5 million tonnes as compared to 4 million tonnes in the same month last year.  Coromandel International and Chambal Fertilisers have seen major sales growth in the sector. The research firm Prabhudas Lilladher is bullish on 5 stocks in the sector and among that they expect stock Insecticides India may see the upside of 82 percent, report dated June 09, 2020.

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26 Aug, 2025 12:21

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By Dharmesh Shah ICICI Direct.com Research

The equity benchmarks witnessed profit booking since the start of February 2018 signalling pause in the recent uptrend after a rally of 12 percent during previous six weeks.

The index in the process maintained its tendency of taking a breather after rallying for five to seven weeks as seen since CY’17. The subsequent corrective decline has typically lasted for two-three weeks.

In the present scenario, with almost two weeks of fall already in place, we expect supportive efforts to emerge near the key value area of 10300-10100 region.

Therefore, investors should utilise ongoing correction as an opportunity to accumulate quality stocks in a staggered manner. The sharp recovery during current week’s panic low of 10,300 indicates presence of buying support at lower levels.

Going forward, we expect Nifty to hold the key support zone of 10100-10300 and lead a pullback towards 10,750-10,800 levels in February 2018 as it is the Confluence of 50% and 61.8% retracement of recent decline (11171-10276) is placed at 10725-10830 and the breakdown level and Budget low is placed at 10880 levels.

The index is likely to consolidate and form a base formation in this broad range, which is likely to act as a foundation for next leg of rally in line with long-term bullish price structure

We expect the Nifty to hold its key support zone of 10100-10300 in the current decline. The key support is marked by the confluence of:

* 80% retracement of December 2017 – January 2018 rally (10075-11171) at 10295 which was held in current week’s panic decline

* The strong base formation in November 2017 and a panic low of Gujarat election result day is placed in the 10033-10075 region

* Long-term 200-day rising moving average is placed at 10033 levels

Here is a list of two stocks which could give up to 20% return in the next 6 months:

Zee Entertainment: BUY CMP – 581| Target Rs698| Stop Loss Rs540| Return 20%| Time Frame 6 months

The share price of Zee Entertainment managed to topple its CY2000 peak in late 2016. Since then, it has been in a consolidation mode thereby discounting the disruptions created by key reforms like demonetisation and implementation of GST.

Recently, the stock has moved above its 2016 high and is seen consolidating above the breakout area in the last one-month signalling positive bias and resumption of a fresh uptrend.

The share price corrected from its October 2016 peak of Rs589 to anchor around Rs430 in December 2016. The subsequent 12-month period witnessed a basing pattern wherein the stock discounted a host of headwinds while maintaining a higher bottom formation.

The entire price action during this period has taken the shape of a contracting symmetrical triangle, which is a continuation pattern.

The consolidation, which is viewed as a secondary corrective phase within the primary uptrend, has rested upon long-term 52-week EMA. In early December 2017, the share price resolved higher out of a triangle pattern signalling end of corrective bias and resumption of the uptrend.

The aforementioned technical observations make us believe the consolidation phase that lasted over 12 months has come to maturity, in turn, giving a fresh entry opportunity.

We expect the stock to move higher towards the projected target of Rs710 in the medium term being the measuring implication of the triangular pattern breakout.

Reliance Industries: BUY at CMP Rs894| Target Rs1070| Stop Loss Rs810| Return 20% Time Frame 6 months

The share price of Reliance industries has been consolidating between the range of 970 and 870 in the last four months thus forming a base for the next up move.

The stock is currently placed near the lower band of the recent consolidation thus providing fresh entry opportunity to ride the next up move in the stock

The overall positive structural trend still remains intact as the five weeks of a rally during September to October 2017 from Rs785 to Rs960, went through nine weeks’ time wise correction, got retraced by 50% of the entire leg of up move.

The limited price wise correction corresponding to elongated time correction shows inherit strength and foretell positive momentum, going ahead.

Among the oscillators, the daily stochastic has generated a bullish crossover above its nine period’s average thus supports the positive bias in the stock in the short term.

The above-mentioned technical evidence suggests the four months’ consolidation is likely to conclude, in turn, giving a fresh entry opportunity.

We expect the stock to move higher towards the projected target of Rs1070 in the medium term being the price equality of the last leg of up move from Rs779– 958 as projected from the recent trough of Rs895.

(Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.)

Disclaimer: The author is Head Technical, AVP at ICICI Direct.com Research. The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.