SMC Global bets on TVS Motor, Kotak Bank & HDFC for 7-8% returns in short term

Indian benchmark indices greeted the new financial year with positive moves. In recent sessions, the sharp rally was specifically seen in PSU banks, metal and IT counters which took the benchmark indices at all time highs.

On derivatives front, consistent Put writing was observed in 11,700-11,600 and 11,500 strikes while 12,000 Call strike holds with maximum open interest of nearly 23 lakh shares which will act as major hurdle for the index in this series.

We also believe that sector rotation may continue in coming sessions as well and index may consolidate at higher levels before taking next up swing as traders will remain cautious before the RBI policy outcome.

On the technical front, 11,600-11,550 levels will be key support levels for the Nifty and current trend may likely to continue towards 11,800-11,850 levels.

TVS Motor Company: Buy | Target: Rs 525 | Stop loss: Rs 460 | Upside: 8%

The stock has been maintaining its downtrend and trading well below its long term moving averages since the beginning of the year. However at current juncture stock has formed a Double Bottom pattern on daily time frame and bounce back sharply above its short term moving averages.

Additionally, the stock has also managed to take support at its 200-day exponential moving average on weekly interval which suggest limited downside for prices in short term.

Additionally one can also witness a formation of W pattern along with positive divergence on secondary indicators. So, traders can accumulate the stock in range of Rs 485-487 for the upside target of Rs 525 levels with stop loss below Rs 460.

HDFC: Buy | Traget: Rs 2130 | Stop loss: Rs 1900 | Upside: 7%

The stock has been maintaining its bull trend on broader charts. However from last two weeks some consolidation has been witnessed in prices in range of Rs 1900-2000 levels.

At current juncture stock has formed an inverted head and shoulder pattern on daily time frame and is on verge of a breakout above the neckline of the pattern formation.

So, traders can accumulate the stock in range of Rs 1990-1997 for the upside target of Rs 2130 levels with stop loss below Rs 1900.

Kotak Mahindra Bank: Buy | Target: Rs 1,425 | Stop loss: Rs 1,276 | Upside: 7%

After a sharp rise from Rs 1250 levels to Rs 1360 levels in short span of time, the stock has been consolidating in a thin range of Rs 1360 to Rs 1310 levels from last three weeks. This consolidation has formed a rectangle pattern on daily time frame on technical front which is generally traded as a continuation pattern.

Additionally, the stock has also formed an inverted head and shoulder pattern on shorter time frame which is again bullish in nature. So, traders can accumulate the stock in range of Rs 1330-1340 for the upside target of Rs 1425 levels with stop loss below Rs 1276.