ICICIdirect.com's report on Shriram Transport Finance Corporation
"Shriram Transport Finance Corporation, driven by strong FII inflows, the Nifty has moved up sharply to 6550. The current move is mainly supported by banking, oil & gas and capital goods stocks. With the Nifty trading at lifetime highs, most stocks that were trading sideways or were reeling under heavy shorts positions, started to move up. Shriram Transport Finance is one such stock, which was trading sideways for the last two quarters. As the NBFC space has started to participate in the current up move, we believe this stock is also likely to move up
The open interest in the stock has broadly remained flat from the December series onwards. However, in the last leg of the downward move seen in the Nifty in the middle of February 2014, the stock corrected over 12 percent while the OI in the stock moved up 36 percent to 1857 contracts. However, as the stock moved over 15 percent in the last five trading sessions these short positions are seeing closure. This is fuelling upsides in the stocks. However, looking at the OI pattern of the stock in the last year, the stock is still low on leverage, which bodes well for upsides
The stock has been trading in the range of Rs 570-680 in the last seven months. Every time it is approaching near these stated levels, we have seen a pick-up in delivery, which resulted in the negation of the trend. However, this time around, the stock has seen a sharp pick-up in volumes much before reaching the higher band, which suggests strong hands are getting active. Hence, the stock may witness a breakout
With upcoming elections, the financial space is likely to attract further money flows as seen prior to last elections
On the lower side, all important supports in the form of 50, 100 & 200 DMA are placed in the range of 600-620, suggesting strong support near these levels. Thus, we recommend buying the stock, with a stop loss of Rs 582 for a target price of Rs 745," says ICICIdirect.com research report.
Recommendation:Buy Shriram Transport Finance in cash in the range of Rs 640-652Target: Rs 745Stop loss: Rs 582 on closing basisTime Frame: 3 months
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies 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.
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