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RBI monetary policy: MPC maintains status quo, 10 rate-sensitive stocks to buy for medium to long term

The RBI left the repo rate unchanged at 4 percent and the reverse repo rate at 3.35 percent, saying it would continue with an accommodative stance as long as necessary to support growth

August 06, 2021 / 11:03 AM IST
 
 
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The Reserve Bank of India's monetary policy committee (MPC) kept key rates unchanged on August 6 for the seventh successive time following its bi-monthly review.


The central bank held the repo rate, its key lending rate, steady at 4 percent and the reverse repo rate, the borrowing rate, at 3.35 percent and said it will continue with an accommodative stance as long as necessary to support growth.


"The monetary policy announcements came exactly on expected lines— continuation of the accommodative monetary stance, status quo in policy rates, maintaining the FY GDP at 9.5 percent and upward revision in FY 22 CPI inflation rates. The upward revision in CPI inflation rate to 5.7 percent from 5.1 percent earlier reflects the higher inflation prints in recent months," VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

But the MPC believes that the higher inflation trend is transitory since it is caused by supply-side constraints. The governor again reiterated that the RBI's priority would be to promote growth within the framework of financial stability, he said.

Vijayakumar further added that the RBI is rightly concerned that any departure from the present pro-growth monetary policy may "kill the nascent and hesitant recovery".  The communication from the central bank augurs well for the continuation of the growth impulses in the economy.


We have collated a list of rate-sensitive stocks that may be a good buy at current levels or on dips from a three-six months' perspective. Returns are calculated based on August 4 closing price:

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Expert: Rajesh Palviya, VP-Technical and Derivative Research, Axis Securities.

Bajaj Finance: Buy| LTP: Rs 6360| Buying Range: 6324-6300| Target: Rs 6600-6800| Stop Loss: Rs 6170| Upside 4-7% 

The stock is in a strong uptrend across all the time-frames, forming a series of higher top and higher bottom formations. This represents a strong momentum ahead.

The stock is well-placed above its weekly multiple resistance zone of 6,200-6,250, which signals strength ahead. The support zone also coincides with its 20-day SMA (6,174) that remains a crucial support zone for the stock.

State Bank of India: Buy| LTP: Rs 457| Target: 478-495| Stop Loss: Rs 430| Upside 4-8% 

Since June 2021, the stock was consolidating within 443-400 levels, however, with the current week's price action, it has decisively broken out from its multiple resistance zone of 443 on a closing basis, which signals a resumption of the earlier up move.

This breakout is accompanied by huge volumes indicating increased participation in the rally. This buying emerged from its 20 and 50-Days SMA support zone, which remains a positive bias.

Also read: RBI pegs CPI inflation estimate at 5.7% for FY 2022

Ashok Leyland: Buy| LTP: Rs 135| Target: Rs 150-158| Stop Loss: Rs 128| Upside 11%

The stock gave a breakout from its six months "consolidation zone" (132-105) on a closing basis earlier this week. Huge volumes were observed at this breakout, pointing to an increased participation in the rally.

The stock is well-placed above its 20, 50, and 100-day SMA that reconfirms a strong uptrend. The daily and weekly strength indicators are in a bullish mode, which supports strength in the near term.

Ashis Biswas, Head, Technical Research, CapitalVia Global Research

IndusInd Bank: Buy| LTP: Rs 1019| Target: Rs 1590| Stop Loss: Rs 810| Upside 50%

The stock has been in a consolidation mode for the past couple of months and is ready to give a trendline breakout on its monthly charts above 1,067.

The daily charts suggest the support of 100 and 200- daily moving averages (DMAs) and is also signalling reversal from the support level. Therefore, we advise taking a position in the stock with a stop loss of 810 and a long-term target of 1,590.

Punjab National Bank: Buy| LTP: Rs 39.40| Target: Rs 70| Stop Loss: Rs 33| Upside 77%

The stock is consolidating at its support level on its monthly charts and is ripe for a breakout. The stock is sustaining above its 200-DMA and on the weekly charts, is signalling a reversal.

Therefore, we advise buying the stock with a long-term target of 70 and a stop loss can be placed below 33.

Maruti Suzuki India: Buy| LTP: Rs 7101| Target: Rs 9000| Stop Loss: Rs 6400| Upside 26%

The stock is taking the support of 7,000 and is suggesting a reversal on its daily chart and is ripe for a trendline breakout.

The stock is taking support of 100 & 200 DMAs on its daily chart and therefore, we advise taking a position in the stock with a long-term target of 9,000 and a stop loss can be placed below 6,400.

Sunteck Realty: Buy| LTP: Rs 401| Target: Rs 530| Stop Loss: Rs 350| Upside 32%

The stock has given a consolidation breakout on its daily charts. It is also taking support near its 100 and 200-DMAs.

The stock has also given a resistance breakout on its monthly charts and therefore, we advise taking a position in this stock with a target of 530 and a stop loss can be placed below 350.

Jignesh Pandya, Senior Research Analyst, Monarch Networth Capital Limited

DLF Limited: Buy| LTP: Rs 350| Target: Rs 395-440| Stop Loss: Rs 310| Upside 12-25%| Time 3-4 months

Prices have given breakout on the monthly chart and are sustaining above the neckline of the Head & Shoulder pattern from the past four months.

The monthly time-frame is suggesting a strong build-up in price momentum and any dip on lower timeframe should be taken as buying opportunity.

Daily chart: Prices are rising in a higher top, higher bottom formation since March 2020. As per Elliot wave, prices are rising in the fifth wave with strong momentum.

It is recommended to buy the stock at the current market price with a stop loss below 310 and a target of 395–440.

Axis Bank: Buy| LTP: Rs 753| Target: Rs 827-900| Stop Loss: Rs 600| Upside 10-19%| Time 3-4 months

Prices have the strong support of upward sloping trend line and sustaining above the same on the monthly chart. The stock have witnessed a “V’’– shaped recovery and is in a strong uptrend.

RSI (14) period is at 58 level, indicating more upside. It also has the strong support of upward sloping trend line. Hence, any pullback on the lower timeframe should be a buying opportunity.

Prices are forming an Inverted Head and Shoulder chart pattern on the weekly chart. The stock is trading near the Neckline resistance and break out of the same could extend the upside further in the medium to long term.

RSI (14) period is at 57, pointing to space for more upside. We recommend buying the stock at the current market price or on dip, keeping a stop loss at 600 and a target of 827–900.

Bank Of Baroda: Buy| LTP: Rs 83.35| Target: Rs 110-120| Stop Loss: Rs 60| Upside 83-100%| Time 3-4 months

Prices have taken strong support of upward sloping trend line as well as it is on the verge of a break out as per Fibonacci Gann Fan tool on the monthly chart.

RSI (14) period has given a break out of 50 levels and sustaining above the same which is confirming reversal in the prices for medium to long term. Hence, any pullback on the lower timeframe should be taken as buying opportunity.

Weekly chart: Prices are trading in the swing formation and indicating to complete the last leg of the swing from current levels. Higher high, higher low formation also suggests a firm price movement in the medium to long term.

RSI (14) period is also on the verge of a break out of downward sloping trend line, which may accelerate the upside.

We recommend buying the stock at the current market price or on a dip, keeping a stop loss at 60 and a target of 110-120 levels.

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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