Amara Raja, Axis Bank, CEAT to HPCL - Top Diwali 2020 Picks for HDFC Securities

HDFC Securities has picked 4 stocks, Amara Raja Batteries (leading manufacturer of batteries and supplier to many Auto companies), Axis Bank (One of the largest private bank in India), CEAT (pick from Tyre sector, supplier to Auto companies) and HPCL from the OMC (Oil and Marketing) Space. . Auto sector has been outperforming for the last many months, so HDFC Securities have picked Amara Raja Batteries and CEAT. Private Banking space has seen good up move due to better than expected numbers and good management commentary. HPCL has been consolidating for a while, positive news on buyback can move the stock price on the upside.

Amara Raja Batteries: Stock price has broken out from the downward sloping trend line on the monthly charts. Stock price has been trading above all important moving averages which indicates a bullish trend on all time frames. Stock has been forming higher tops and higher bottoms on daily and weekly charts. Momentum Indicators and Oscillators have been showing strength on medium to long term charts. Auto sector has been outperforming for the last many months. Nifty Auto is looking strong on the medium to long-term charts. Considering the Technical evidence discussed above, HDFC Securities recommends buying the Amar Raja batteries in Rs 789.75- 800 band and average at Rs 690, for the upside targets of Rs 890 and Rs 940, keeping a stop loss on closing basis at Rs 640.

Axis Bank: After a sharp decline in the month of September 2020, the stock price of Axis Bank Ltd has witnessed an excellent upside bounce in the subsequent month of Oct 20. Currently, the stock price is making an attempt to move above the multi month hurdle of Rs 520-530 levels. HDFC Securities observe a bullish sequence of higher tops and bottoms on the monthly time frame chart. The stock price has also moved above the hurdle of the monthly 10 period of EMA. The resistance of 20 EMA is now placed at Rs 550. The monthly 14 period RSI has sustained above 40-45 levels and is gradually moving up. As per its range movement of 30-60 levels, the monthly RSI is expected to move up to 60 levels (from the current reading of 47). Considering the Technical evidence discussed above, HDFC Securities recommends buying Axis Bank Ltd at CMP and average at Rs 475, for the upside targets of Rs 590 and Rs 640, keeping a stop-loss on closing basis at Rs 448.

Ceat: Stock price has surpassed the crucial resistance of its previous top placed at Rs 1076 on the monthly chart. Stock price has also taken out the resistance derived from the 50 month EMA, placed at Rs 1031. From the Month of April to Sep 2020, Volume rose along with the gradual price rise. In the month of October 2020, Stock price has risen with momentum and broke out from the long-term resistance. Monthly Indicators and Oscillators like DMI, MACD and RSI have shown fresh buying signals on the charts. The Auto Sector has done exceptionally well since March 2020 bottom. Auto Ancillary space is also expected to continue their outperformance in the coming months. Considering the Technical evidence discussed above, HDFC Securities recommend buying the stock at Rs 1100- Rs 1130 and average at Rs 1000, for the upside targets of Rs 1230 and Rs 1425, keeping a stop loss on closing basis at Rs 922.

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HPCL: Stock is currently trading near its long term support zone of Rs 180- Rs160. Stock has taken support of the lower Bollinger band on the Monthly chart and is moving higher. Bullish head and shoulder price pattern is formed on Daily charts and on 23rd October bullish engulfing is observed on the Weekly chart which indicates high probability of trend reversal in the near term. Positive divergence is witnessed on RSI and SMI indicators on a Monthly time frame which suggests prices could move higher in the near term. Also, positive divergence on RSI and SMI indicates that the current downward trend is losing its momentum which gives an early indication for trader/investor to create the long position at low risk near the end of the downtrend. Considering the Technical evidence discussed above, HDFC Securities recommend buying the Hindustan Petroleum Corporation Limited at a current market price of Rs 187.15 and average at Rs 171, for the upside targets of Rs 210 and Rs 223, keeping a stop loss on closing at Rs 166.