HUL, ITC, Kotak Mahindra Bank top stocks for next Holi; expect 14-22% return: Mehul Kothari of Anand Rathi
In an interview with Zeebizs Kshitij Anand, Kothari highlights that in the very short term, traders can book longs and re-enter once we see a meaningful dip while long-term investors can keep holding their positions as the broader structure still remain extremely strong.
Mehul Kothari AVP – Technical Research, Anand Rathi Shares & Stock Brokers said that there could be a possibility of some profit booking from the zone of 17300 – 17500.
In an interview with Zeebiz's Kshitij Anand, Kothari highlights that in the very short term, traders can book longs and re-enter once we see a meaningful dip while long-term investors can keep holding their positions as the broader structure still remain extremely strong. Edited excerpts:
Q) Bulls took charge of Indian markets this week. Benchmark indices rose over 4% in the holiday-shortened week. What led to the price action?
A) Although truncated but it was a phenomenal week for the bulls on the D - Street. The benchmark indices displayed tremendous strength and posted a recovery of around 4 per cent from the previous week’s close.
The Nifty50 index reclaimed 17,300 mark during the final session of the week amid the easing worries between Russia and Ukraine.
Another reason could be the US Fed meeting which is done and dusted and the cooling-off of the commodities prices especially the crude also supported the sentiment.
The index has recovered over 1600 points from the recent low of 15,671.
Q) The Nifty50 is back above 17000. What is the kind of level you foresee for the index and Nifty Bank in the coming week?
A) Technically, the Nifty50 index is now well above 16,800 mark which was the breakdown zone. In fact, it has now surpassed 17000 mark on Thursday to close above the gap area created on 24th Feb 2022 due to the Russia Ukraine war.
This indicates that the bottom of 15671 is very firm and might not be tested again for some months or so. However, on the upside, Nifty got stuck exactly near 17330 mark which is the 61.8% retracement of the entire fall from 18300 to 15700.
In addition, we have Ichimoku flat line resistance near 17500 mark. Thus, going ahead, there could be a possibility of some profit booking from the zone of 17300 – 17500.
In that scenario, 17000 – 16800 could be the support zone from where the buying could re-emerge.
With regards to NiftyBank – the index has rallied by more than 5 percent for the week ended 17 March. During the process, it has reclaimed 36000 mark on a closing basis from the lows near to 32000 mark.
Thus, it seems that the bottom of 32000 is a strong one and might not get retested soon. Similar to the Nifty index, even the NIFTY BANK index got stuck exactly at 61.8% retracement level of the previous fall.
Thus, for the coming week, 36500 – 37500 could be the zone from where we could witness some profit booking. On the downside, 35000 – 34000 could be an attractive zone to deploy fresh longs.
Q) Sectorally, consumption and banking stocks took charge. What led to the price action, however, last week’s star ‘metals’ took some beating? What led to the price action?
A) Consumption and banking are high weightage sectors from the FII perspective and when we saw FII selling due to risk-off -- these were the natural choices. They were highly oversold and that could be one of the possible reasons for such a sharp recovery in them.
As far as metals are concerned, we have seen a significant run in this space driven by materials prices largely. Recently, we have seen a sharp correction in lot of commodities; hence, the reaction is seen in our Metal space.
Q) As India celebrates the festival of Holi – which are your Holi picks for investors for a time period of 9-12 months.
A) Here is a list of stocks for the long term -
HUL: Buy on dips| LTP Rs 2102| Stop Loss: Rs 1900| Target: Rs 2400| Upside 14%
Being from a defensive space, HUL has not done much in the last many months. On the technical front, it is oversold on larger degree charts.
During the recent fall, it came down to 1900 mark which is the placement of its 200-weeks moving average. The stock has retested this average after 10 – 12 years which indicates that this is a good time to grab the stock for investment.
Traders are advised to buy the stock in the range of 2100 - 2040 with a stop loss of 1900 on a closing basis for the upside potential target of 2400 in the coming 9 to 12 months.
ITC: Buy on dips| LTP Rs 245| Stop Loss: Rs 210| Target: Rs 300| Upside 22%
In our previous interview, we recommended buying ITC near the 220 mark for the upside target of 245. That target of 245 was tested in Thursday’s trading session.
During the process, the stock has confirmed another range breakout above the 240 mark. Further, we have a triple bottom formation on the weekly chart as well near the 200 mark.
Since the counter is defensive in nature, we expect very less volatility in the stock. Thus, traders are advised to buy the stock on dips in the range of 245 - 235 with a stop loss of 210 on closing basis for the upside potential target of 300 in the coming 9 – 12 months.
Kotak Mahindra Bank: Buy on dips| LTP Rs 1819| Stop Loss: Rs 1650| Target: Rs 2100| Upside 15%
Contrary to other private banks like ICICI Bank and Axis Bank, Kotak Bank is yet to undergo a sharp recovery. Technically, it has made a double bottom formation near the 1650 mark.
It has a strong demand near that zone. It seems that the stock has a long way to go from its current levels. Thus, traders are advised to buy the stock in the range of 1820 - 1780 with a stop loss of 1650 on a closing basis for the upside potential target of 2100 in the coming 9 – 12 months.
Q) The US Fed took the first step in raising rates which was factored in by market participants. But, do you think further rate hikes could impact equity markets or the worst is factored in?
A) If the markets had to react to the Fed hike then today was the day. Markets have taken the decision with a pinch of salt and probably factored in further hikes too.
In case of any shake-off, markets would need some other trigger and not the rate hike.
Q) Bulls have taken control of D-Street – do you think these are appropriate level to invest or long-term investors could wait for a while?
A) As mentioned above; since the index has rallied around 1600 points from the low there is a possibility of some profit booking in the coming sessions.
Thus, very short-term traders can book longs and re-enter once we see a meaningful dip. While investors can keep holding their positions as the broader structure still remains extremely strong.
(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)
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