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Last Updated : Feb 24, 2020 09:59 AM IST | Source: Moneycontrol.com

Potential breakout buys: SBI, HDFC AMC among 10 stocks to consider for Feb expiry week

Swing low of 12037 was observed on February 17 is likely to act as crucial support while 12246 remains (swing high of February 14) to be the first resistance level.

 
 
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The Nifty50 which saw marginal losses during the week ended February 23 is likely to remain volatile in the February expiry week as well, suggest experts. The index failed to hold on to 12,100 but held on to crucial support of 12,000-12,030.

Rising concerns over coronavirus capped the upside for markets in the week gone by and are likely to influence the near-term trend in the last week of February as well. But, as long as the index holds 12,000 levels, bulls have nothing to fear, but the trend could remain sideways.

“With February derivatives expiry coming up, and with most of the shorts already being covered, there seems to be too little fuel in the engine to drive past 12,300, a significant resistance for now. Traders may wait for the new series for the next leg of upsides aiming 12,850,” Anand James, Chief Market Strategist at Geojit Financial Services told Moneycontrol.

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The Nifty is currently hovering within 11,900-12,300 zone and a decisive break on either side would trigger the next directional move, suggest experts.

Swing low of 12,037 observed on February 17 is likely to act as crucial support, while 12,246 remains (swing high of February 14) to be the first resistance level.

“For the upcoming week, Nifty is likely to take support at 12,000 and 1,2250 would be a stiff resistance level,” Gaurav Garg, Head of Research at CapitalVia Global Research Limited – Investment Advisor told Moneycontrol.

“Therefore, it is recommended to remain cautious on the Indian markets in the near-term and keep a close watch on the movement of currency and crude oil prices,” he said.

We have collated a list of 10 potential breakout stocks for the February expiry week. The holding period is 3-4 weeks:

Expert: Anand James, Chief Market Strategist at Geojit Financial Services

Delta Corp: Buy | LTP: Rs 156.3 | Stop Loss: Rs 144 | Target: Rs 174

The proximity of 2019’s low has given the courage for bargain hunters to look for a bounce back from the 35 percent fall that had unfolded in just three months.

This attempt has formed a hammer candlestick pattern on the weekly charts, supporting the buy view for a 10 percent up move.

India Cements: Buy | LTP: Rs 75.55 | Stop Loss: Rs 69 | Target: Rs 87.4

The present upswing follows a successful morning star pattern formation. A narrowing Bollinger band raises the potential for price expansion, and as the price has bounced off after penetration of lower Bollinger band, and up move aiming 87.4, the upper band of the weekly Bollinger band can be played.

Century Plyboards: Buy | LTP: Rs 154.3 | Stop Loss: Rs 148 | Target: Rs 162

The last couple of days’ buying effort has brought a pause to the fortnight-long fall. With such pause having occurred at 38.2 retracement level, the ensuing bullish engulfing pattern suggests that the up move is worth playing.

A larger breakout (@180) pattern may also be in the formation, but since this could first stymie the ongoing up move, only a modest target of 162 should be attempted initially.

Expert: Ajit Mishra, VP- Research, Religare Broking

Marico Limited: Buy | LTP: Rs 306.20 | Initiation range: 303-306 | Target: Rs 325 | Stop loss: Rs 296

Marico has been witnessing correction for the last five months and is currently hovering around the support zone of the long term moving average of 200-EMA on the weekly chart.

Indications are in the favour of marginal consolidation followed by steady rebound ahead. We advise accumulating fresh longs as per the given levels.

HDFC Asset Management Company Ltd: Buy | LTP: Rs 3,383.80 | Initiation range: 3,360-3,370 | Target: Rs 3,550 | Stop loss: Rs 3,270

HDFC AMC is currently trading closer to the neckline (support) area of the consolidation range as it has retraced marginally after the breakout.

The chart pattern combined with the positioning of confirmation indicators is pointing towards fresh up move ahead. Traders should utilise this opportunity and create fresh longs in the mentioned range.

Expert: Mehul Kothari, Senior Technical Analyst at IndiaNivesh Securities

Bank of Baroda (BoB) | Buy | CMP: Rs 82.30 | Target: Rs 92 | Stop loss: Rs 77 | Upside: 12%

During the year 2009, Bank of Baroda confirmed a breakout at its peak of Rs 80 and then rallied towards Rs 192. Then again, it retested this level of Rs 80 and registered a top of Rs 222.

Now, the stock has been constantly falling from that peak of Rs 222 and again reached the Rs 80 mark.

The zone of Rs 80 has been a demand level since the last 10 years. Considering history, we expect the multiyear support of Rs 80 to attract some buying in the stock.

Traders are advised to buy the stock near Rs 82.

ITC | Buy | CMP: Rs 207.90 | Target: Rs 220 | Stop loss: Rs 198 | Upside: 6%

ITC has been in a corrective mode right since September 2018 and has corrected almost 36 percent from the peak of Rs 317.

Recently, the stock found support near Rs 200 mark, which is the 100 percent extension of the move from the peaks and troughs of Rs 354 to Rs 241.

This can also be called as a bullish harmonic AB=CD pattern, which indicates the possibility of a bounce.

Traders are advised to buy the stock on a dip near Rs 205.

Expert: Sameet Chavan Chief Analyst – Technical & Derivatives, Angel Broking

Kiri Industries Ltd: Buy | LTP: Rs 423 | Target: Rs 464 | Stop Loss: Rs 398.40

This stock is yet to participate in the rally that the broader market has seen over the past couple of months. We have already witnessed a long consolidation of nearly three months and finally, the stock prices managed to confirm a breakout in the upward direction.

If we look at the overall volume activity, it has risen substantially in the recent up move. Also, the ‘RSI-Smoothened’ on the daily chart has crossed above the 70 marks, which we believe should provide the impetus for the next leg of the rally.

Thus, we recommend buying this stock for a target of Rs.464 over the next days. The stop loss should be fixed at Rs.398.40.

Tata Steel: Buy | LTP: Rs 443.55 | Target: Rs 468 | Stop Loss: Rs 428

This stock is extremely sensitive to any development concerning China. Recently, the stock managed to give a gigantic up move from lower levels but rising concerns over ‘coronavirus’ dented this rally and hence, the stock had to undergo a strong bout of profit booking.

But now, it looks like it has digested that worry and technically speaking, we can interpret this decline as a healthy retracement of the larger degree uptrend.

Looking at the favourable risk-reward ratio, traders are advised going long for a target of Rs.468 over the next few days. The stop loss should be fixed at Rs.428.

Expert: Amit Gupta, Head of Derivatives at ICICI Direct

State Bank of India: Buy February future in the range of Rs 326-328 | Target: Rs 348 | Stop Loss: Rs 317

State Bank of India (SBI) has shown significant resilience vis-à-vis the rest of the PSU banking space. Also, ahead of its SBI Card IPO, significant long positions have been formed.

The current open interest in the stock is close to the highest ever. The stock has seen continued Call writing at ATM 330 and 340 strikes while in the recent recovery, closure of positions was seen.

The OI in 330 strikes has declined to 3,500 contracts from almost 5,000 contracts seen a couple of days back. We believe downsides would be limited in the stock and it can be bought for upsides towards Rs 350.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Feb 24, 2020 09:59 am
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