ICICIdirect.com's report on Oriental Bank of Commerce (OBC)
The Nifty continues to consolidate near its all-time high levels where sectoral rotation has been clearly evident for the last few weeks. Despite the range bound Nifty, midcap stocks from across sectors remained buoyant while the midcap index moved to its life-time high levels
Among PSU Banks, the leader of the pack, SBI, stood firm and closed November at all-time high levels on monthly basis. However, midcap stocks from the sector are still lagging. We expect to observe momentum in these stocks in the days to come. OBC is one such stock where we expect it to exhibit a strong up move in the days to come on the back of the ongoing short covering
Since October, when OBC made lows near Rs 220 levels, its stock futures witnessed closure of more than 40% open interest along with price increase. The trend clearly indicates ongoing short covering in the stock. We expect the current trend to continue in the near term and the stock may move towards its June highs of Rs 360
The high historical volatility of about 50% along with high beta of 1.88 indicates the stock will exhibit large directional moves. As downsides in the broader index seems to be limited, the stock is likely to remain positive in the days to come.
"Prima facie, since September 2012, 100 DMA levels have acted as a trend setter for OBC. The stock has witnessed buying support from these levels on numerous occasions. Recently also, the stock witnessed a bounce back from its 100 DMA of Rs 275. We expect downsides to be limited towards Rs 280. Moreover, during the last quarterly results, OBC witnessed the highest delivery based volume in the last year near Rs 280 levels. Despite weakness, it broadly remained above these levels.
Recommendation
Buy OBC in the range of Rs 313-318Target: Rs 378Stop loss: Rs 284Time horizon: Three months
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