Prefer auto, pharma & select PSU banks; see up to 14% return in these 3 stocks

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26 Aug, 2025 12:21

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Vikas Jain

The Nifty saw mild profit booking between 10,780 and 10,800 levels last week. It touched a high of 10,784 and witnessed selling pressures in the last three sessions to end 0.7 percent lower week-on-week. On the earnings front, there was some disappointment from HCL Technologies, Hexaware Technologies and NIIT Technologies. This resulted in stock prices correcting 10-15% post the announcements.

InterGlobe Aviation (Indigo), Century Textiles, Siemens and JSW Energy also witnessed sharp profit booking, in line with the broader markets, post their results announcements as analysts cuts their FY19 earnings estimates. Kotak Mahindra Bank bucked this trend and scaled a new all-time high post its results.

In global news, the US Federal Reserve kept interest rates unchanged in line with expectations and global markets remained flat.

For May 4 week, the Nifty declined 0.7 percent, while midcaps and smallcaps declined 2.1% and by 1.1%, respectively. Among sectors, metals, energy, realty and IT declined by 3.5%, 2.8%, 2.3% and 2.5%, respectively, last week.

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The Bank Nifty gained one percent last week on the back of positive momentum in private banks. India VIX gained 10.3 percent to close at 13.3 levels. A breakout above 14 would increase volatility going forward.

Market outlook
We expect some amount of consolidation at current levels, with individual sectors and stock rotation depending on further newsflow emanating from quarterly results during May. Among sectors, we remain positive on pharma and auto. One can initiate fresh longs in select state run banking stocks at current levels as the risk-reward ratio continues to remain favourable after the recent sharp correction.

Option data continues to suggest strong support at 10,500 levels with open interest of 40 lakh shares in put options. On the upside, 11,000 has the highest OI of 61 lakh shares in call options.

Here is a list of three stocks which could deliver up to 10-14 percent returns in the short-term:

Havells India | CMP: Rs 540| Rating: Buy | Target: Rs 592 | Stop loss: Rs 510 | Return: 10%

The stock has retraced 50% of prior up-move (Rs 484 - Rs 559) and later reversed after taking support of its long-term moving average (100-day EMA). On the daily chart, the stock has formed a bullish reversal pattern-Piercing Line.

The key technical indicators are trading below their averages, signalling near-term consolidation in the stock before it resumes the northward journey and revisit the life-time-high.

In case of any decline, the stock will find strong support around its 200-day EMA. Thus long position can be initiated here for the target of Rs 592 with a stop loss of Rs 510.

Petronet LNG | CMP: Rs 219 | Rating: Buy | Target: Rs 245 | Stop loss Rs 210 | Return: 12%

The stock remained in pressure from last couple of days, where the lower band of the falling channel and its 20-month moving average worked as key reversal point for the stock.

The key technical indicators reached to their oversold zone amidst prior decline, signaling limited downside in the stock.

We believe that the stock will bounce back before it resumes the southward journey. On the higher side, the stock will face hurdle around its upper band of the channel.

In case of any decline, its 20-month moving average will continue to work as key reversal point for the stock. Thus long position can be initiated here for the target of Rs 245 with a stop loss of Rs 210.

Manappuram Finance | CMP: Rs 127| Rating: Buy | Target: Rs 145| Stop loss: Rs 119 | Return: 14%

The stock has given break-out from a Bull Flag Pattern and rose to life-time-high, signalling further strong up-side in the stock. The major technical indicators are in bullish mode, coinciding with our short-term view.

We believe the stock will keep moving higher and will soon complete the bullish pattern.

On the lower side, the stock will find support around the upper band of the Bull Flag Pattern. Thus long position can be initiated here for the target of Rs 145 with a stop loss of Rs 119.

Disclaimer: The author is Sr. Research Analyst at Reliance Securities. The views and investment tips expressed by investment expert 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.