HDFC Bank, Infosys and Tata Power—what should investors do at current levels? Experts decode, devise strategy

Index heavyweights HDFC Bank and Infosys led the market correction on Monday, when benchmarks closed lower by nearly 2%, after reporting lower than expected q4 results. These two sectors, especially IT, have been under immense pressure amid earnings season. In the past one-week, Nifty IT has corrected more than 5%, while private bank declined nearly 3% as on April 19.  

On Tuesday, shares of the leading private lender were trading with further weakness and declined over 3% in the afternoon trade, while IT major dropped more than 1.5% adding to the weakness.  

Experts were of the view that investors should employ a wait-and-watch strategy as the stocks can see further correction. 

HDFC Bank  

Ravi Singh, Vice President and Head of Research, ShareIndia says though stock holds promise but at current levels, it may see profit booking.  

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"HDFC Bank posted an increase of 20.8 percent in the total loan given by the bank. At the same time, growth was seen in the products of every sector and segment. Also, the bank's net-NPA stood at 0.32 percent during the January-March quarter this year," said Ravi Singh 

The merger is also going to benefit the bank in the long term, he said. "However, due to the overall correction in the broader indices, HDFC Bank is also witnessing some profit booking. Investors may enter the stock around 1350 levels for the target of Rs 1650 levels in near-term," he added.  

Post results stock price has closed below psychological Rs 1400 mark with continued selling pressure, says Prashanth Tapse, SEBI registered Research Analyst and VP Research at Mehta Equities.  

"Momentum oscillators signalling medium term trend reversal. Selling on strength should be the preferred strategy with targets at Rs 1345 and then aggressive targets at Rs 1275 mark with stoploss at Rs 1475 mark," says the expert.  

Infosys 

IT major, which came out with its results on Wednesday, has been witnessing profit booking upon missing the street's estimates too.  

Manoj Dalmia-Founder and Director-Proficient Equities Limited, says the stock is looking weak on the chart 

"We can expect the price to fall till Rs 1500 levels, which is a support and can be a good place to accumulate. Investors are recommended to avoid buying at the current levels. Holders can average it out at Rs 1500 levels and apply buy at dips strategy," Dalmia recommended.  
The outlook of Infosys is positive on the back of encouraging FY23 growth guidance along with large deal bookings in FY22, says ShareIndia VP .  

"Investors may hold their positions for the target of Rs 1900 levels in a 6-8 months. Additional long positions may also be taken around 1550 levels which is a good level for averaging the positions," said Singh.  

Technically the stock price is trading well below its 200-DMA which is at Rs 1735 mark, says Prashanth Tapse. He is of the view that confirmation of strength will only appear above Rs 1735 mark. "Long term investors can accumulate and apply buy on dips as stock can test sub-Rs 1,600 level in near term. Despite lower-than-expected q4 earnings, we are optimistic for the long term with a target of Rs 1880-1900," said the expert.  

Tata Power 

Besides HDFC Bank and Infosys, one Tata Group stock, Tata Power, was also in the news after agreeing to sell a stake in its renewable business to a consortium led by the U.S.-based BlackRock Real Assets.  Shares of Tata Power were trading nearly 2% lower to Rs 253 per share on BSE in Tuesday's afternoon trade. 

About this scrip, Proficient Equities Limited Director says the stock can be bought at current levels as the breakout that took place earlier was with a good volume. "The stock can be accumulated considering the overall rise in energy consumption and prices. Target price of Tata Power in the medium term is Rs 313," adds Dalmia.  

The deal is expected to fast track the RE growth of Tata Power for the next three years, feels Ravi Singh. The new structure would optimise cash upstreaming and leverage management of the company, the expert says.  

"As the overall market sentiment is in correction mode, we expect that Tata Power may witness value buying around 245-240 levels for the target of 290 levels in near future," he adds. 

The deal is structurally positive for the long term and post deal announcement there was some sort of profit booking attempt seen in a bad market mood and on valuation concern on Monday, says Tapse.  

We do expect a few more deals coming into TATAPOWER RE business in the next 2-3 months and valuations would be re-rated going forward, he says .  

"Technically, the major uptrend is still intact. Any dip should be seen as a buying opportunity as the stock price is likely to surpass its all-time high at Rs 298 mark. Buy at CMP and also on dips between Rs 241-246 mark. Targets at Rs 298 and then aggressive targets at Rs 351 with stop loss Rs 219," says the expert. 

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)