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RBI Monetary Policy: Status quo, 12 rate-sensitive stocks that can give 15-30% return

The central bank has maintained an accommodative stance but there are opportunities in the rate-sensitive space that investors can explore.

June 04, 2021 / 11:09 AM IST
 
 
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The Reserve Bank of India as expected left key rates unchanged in its bi-monthly policy review on June 4 but it cut the economic growth forecast for the current financial year to 9.5 percent from 10.5 percent.

The monetary policy committee (MPC) kept the repo rate at 4 percent and the reverse repo rate at 3.35 percent, RBI Governor Shaktikanta Das said, citing uncertainties on the economic front due to the coronavirus pandemic.

Das, however, said that the dent in urban demand and the spread of COVID-19 in rural areas would impact GDP. The central bank downgraded the GDP growth forecast for FY22 to 9.5 percent compared from 10.5 percent earlier.

Inflation remains a concern for equity markets but the key is demand recovery in the economy hit hard by a furious second coronavirus wave.

The central bank said it will stick to an accommodative stance but there are opportunities in the rate-sensitive space that investors can explore.

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Follow LIVE updates of the RBI MPC monetary policy announcement here

We have collated a list of rate-sensitive stocks that experts say can give 15-30 percent return over the next six-12 months. Returns are calculated based on the closing price of June 3:

Expert: Shitij Gandhi, Sr Technical Analyst at SMC Global Securities Ltd

Maruti Suzuki India Limited: Buy| LTP: Rs 7207| Target: Rs 8520| Stop Loss: Rs 6400| Upside 18%

Since the beginning of the year, the stock has been moving lower with the formation of a lower bottom pattern as prices fell below its 200-day exponential moving average in the recent past.

However, the stock took support around 6,400 and recovered sharply once again to regain the momentum above its 200 days exponential moving average on daily charts.

The stock has had an almost a V-shaped recovery and is forming a higher high pattern on charts with the closing above the 200-day exponential moving average (DEMA) on both daily and weekly intervals.

Traders can accumulate the stock in the range of Rs 7,150-7,200 for the upside target of Rs 8,520 with stop loss below Rs 6,400.

HDFC Bank Limited: Buy| LTP: Rs 1,520| Target: Rs 1,775| Stop Loss: Rs 1,350| Upside 17%

After hitting a 52-week high of Rs 1,641 in February, the stock witnessed a pullback rally and retraced to its 200- DEMA on daily charts, which was placed around 13,50.

The stock formed a double bottom pattern there and once again gave a bounce towards 1,500 to regain the momentum above its short-term moving averages.

The stock has given a fresh breakout above 1,500 after consolidating in a broader range of 1,350-1,500 for more than seven weeks.

On the weekly charts, too, the stock can be seen trading above its all-important moving averages. From the technical front, a breakout above the symmetrical triangle pattern can also be observed on weekly charts.

One can accumulate the stock in the range of Rs 1,500-1,520 for the upside target of Rs 1,775 with stop loss below Rs 1,350.

DLF Limited: Buy| LTP: Rs 297| Target: Rs 380| Stop Loss: Rs 245| Upside 28%

The stock has rallied from 165 to 330, ever since the price has given breakout above the 200-DEMA on daily charts.

However, after testing 332, the stock retraced to 235 and once again took support at its 200 DEMA on the daily interval.

At the current juncture, a “V”-shaped recovery can be seen in prices with positive divergences on secondary oscillators. The rising volumes along with price action suggest a next upswing in price.

One can accumulate the stock in Rs 295-297 range for the upside target of Rs 380 with stop loss below Rs 245.

Kotak Mahindra Bank Ltd: Buy| LTP: Rs 1814| Target: Rs 2075| Stop Loss: Rs 1650| Upside 15%

In late 2020, the stock rallied sharply rally and moved quickly from Rs 1,300 to Rs 1,950.

However, since then, the rally has cooled and the stock is hovering in a broader range of 1,700-1,950 along with multiple supports on the downside.

On the technical front, prices are holding well above their short and long-term moving averages.

The stock is forming up a symmetrical triangle on the weekly interval with strong support at the 1,700-1,650 zone.

We have seen a fresh breakout above key resistance of Rs 1,815 on the daily chart, which points to the next up leg in the coming weeks.

One can accumulate the stock in the Rs 1,800-1,815 range for the upside target of Rs 2,075 levels with the stop loss below Rs 1,650.

Expert: Nandish Shah, Senior Derivative & Technical Analyst at HDFC Securities Ltd

Oberoi Reality: Buy| LTP: Rs 662| Target: Rs 860| Stop-loss Rs 550| Upside 30%

The stock price has broken out on the monthly chart by surpassing the resistance of 640 to close at an all-time high. The stock is forming a bullish higher top, higher bottom formation on the weekly chart.

Oscillators like RSI and MFI are placed above 60 levels. With the 14-month RSI in a rising mode, we expect the upmove to continue. Plus, DI is placed above the Minus DI while ADX line is placed above 25 on the monthly chart, Indicating momentum in the current uptrend.

Therefore, we recommend buying Oberoi Realty at a CMP of Rs 661 and average at 590 level for the upside target of 860, keeping the stop loss at 550.

Bajaj Finance: Buy| LTP: Rs 5901| Target: Rs. 7000| Stop-Loss: Rs 5270| Upside 19%

The stock is forming a bullish higher top, higher bottom pattern on the weekly and monthly charts. The stock price has broken out on the weekly and monthly charts by closing above the resistance level of 5,800 with higher volumes.

During the correction in April, the stock price took support at 200-DEMA and reversed northwards. As intermediate and long-term momentum readings like the 14-week and 14-month RSI are in a rising mode and placed above 60, we expect the uptrend to continue.

Bajaj Finance is one of the outperformers in the NBFC space and we expect its outperformance to continue. Therefore, we recommend buying Bajaj Finance at a CMP of Rs 5,901 and average at 5,500 for the upside target of 7,000, keeping the stop loss at 5,270

SBI: Buy| LTP: Rs 440| Target: Rs 550| Stop-loss: Rs 375| Upside 25%

SBI is the best-performing stock among PSU banks, which are trading at all-time high levels. The stock price has already broken out from the last 10-year consolidation on the monthly chart by surpassing the resistance level of 375 levels.

The stock price is forming a bullish higher top, higher bottom formation on the weekly chart. Oscillators like RSI and MFI are showing strength in the stock.

We expect PSU banks to do well in the coming months led by SBI. Therefore, we recommend buying SBI at CMP of Rs 440 and average at 400 for the upside target of 550, keeping the stop loss at 375.

Expert: Ashish Chaturmohta, Head of Derivatives and Technical Analysis, Sanctum Wealth Management

ICICI Bank: Buy| LTP: Rs 650| Target: Rs 800| Stop Loss: Rs 600| Upside 23%

Technically, since October 2020, the stock has been in a strong uptrend, forming a higher top and higher bottom.

In February, it touched an all-time high of Rs 679 but since then, selling pressure pushed it towards Rs 531.

After hitting a low of Rs 531, the stock resumed its uptrend to bounce back to current levels, which suggest that the momentum is intact. Traders can buy the stock at current levels and on dips towards Rs 630 with a stop loss of Rs 600 and a target of Rs 800.

Havells India Ltd: Buy| LTP: Rs 1072| Target: Rs 1250| Stop Loss: Rs 990| Upside 16%

Technically, from May 2020 the stock saw a strong rally to hit an all-time high of Rs 1,291 in February. After that the price corrected to Rs 970.

For the last three months, the stock has been consolidating between Rs 1,090 and Rs 970. Thus, after a good correction, the stock has formed a base for the next leg of up move.

Traders can buy the stock at current levels and on dips towards Rs 1,040 with a stop loss of Rs 990 and a target of Rs 1,250-1,325.

Cholamandalam Investment & Finance Company: Buy| LTP: Rs 570| Target: Rs 700| Stop Loss: Rs 515| Upside 22%

On the price front, the stock has been in a strong uptrend from June 2020 to February 2021. For the last four months, it was consolidating, while other stocks in the financial sector saw a correction.

The resilience shown by Cholamandalam suggests that the stock has formed a base for the next leg of the uptrend. Traders can buy the stock at current levels and on dips towards Rs 550 with a stop loss of Rs 515 and a target of Rs 700-740.

Expert: Mehul Kothari, AVP – Technical Research at AnandRathi

Amara Raja Batteries: Buy| LTP: Rs 752| Stop Loss: Rs 680| Target: Rs 900| Upside: 20%

For the last six months, Amara Raja Batteries has been in a corrective mode which saw it slip almost 30 percent from the peak of Rs 1,000. The stock is now trading near a very important support zone.

On the weekly chart, it confirmed a Golden Cross of 50-SMA with 200-SMA in the month of Feb 2021. It has retested that crossover and found support at the 200 week’s SMA.

This support could be a demand zone and that makes the stock very attractive for going long. Similar to other auto stocks, we expect a decent recovery in the stock from here on.

Traders with a time frame of three-six months can go long in the stock at the current market price with a stop loss of RS 680 for an upside target of Rs 900.

M&M Finance: Buy| LTP: Rs 162| Stop Loss: Rs 140| Target: Rs 200| Upside: 23%

M&M Financial has been in a corrective phase since February and has fallen from Rs 220 to Rs 150.

At this juncture, it is consolidating near the placement of 200-day SMA. On the weekly scale, it is turning from the Ichimoku cloud support.

This provides an excellent risk-reward ratio for traders. On the monthly chart, we are witnessing a bullish hammer formation which augurs for a fresh up move.

Traders with a time frame of three-six months can go long in the stock at the current market price with a stop loss of Rs 140 for an upside target of Rs 200.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Kshitij Anand is the Editor Markets at Moneycontrol.

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