Domestic markets held their early gains on Wednesday as investors digested the June retail inflation data, which eased marginally to 7.01%. The BSE Sensex rose 250 points to 54,147, and the NSE Nifty 50 advanced 60 points to 16,116. Going forward, markets movement will be guided by fundamental factors of inflation and interest rates globally, economic growth, currency moves, corporate performance and technical factors like FPI fundflows. Volatility continues to be persistent and experts suggest focusing on themes that will give outperforming opportunities. Analysts at ICICIDirect picked Bajaj Finance, Suprajit Engineering as their gladiator stocks based on technical and derivative data. The brokerage firm projects as much as 12% upside potential within the next three months.
Bajaj Finance share price has plunged 18 per cent so far this year, underperforming even Nifty 50 which has tanked 8 per cent so far in 2022. The BFSI space has relatively outperformed the benchmark during the current pullback off June low. According to analysts at ICICIDirect, Bajaj Finance looks lucrative at the current juncture within the BFSI space. “The stock has undergone strong base formation in the vicinity of 80% retracement of April-October 2021 rally (Rs 4362-8050) and is currently sustaining above 50 days EMA. This highlights rejuvenation of upward momentum that augurs well for extension of the ongoing up move,” they said.
Structurally, Bajaj Finance stock has witnessed a slower pace of retracement as over the past nine months, it retraced ~80% of preceding five month’s rally (Rs 4362-8050). “We expect the stock to resolve higher and eventually head towards Rs 6470 in coming months as it is 50% retracement of April-June 2022 decline (Rs 7590-5220) coinciding with 200 days EMA. On the oscillator front, weekly RSI sustaining above its nine period average, highlighting strength that validates positive bias” they added. The brokerage recommends buying the stock in Rs 5850-5940 range with a target price of Rs 6,470 and stop loss of Rs 5,490 per share.
The auto ancillary space has remained resilient over the past two months despite elevated volatility and is expected to outperform in coming months as well. Analysts at ICICIDirect recommend Suprajit at the current juncture as it broke past a strong base formation at key long term 52-week moving average providing a favourable risk reward setup. So far this year, the stock has plunged over 20 per cent so far this year. The share price has formed identical bottoms in the vicinity of Rs 300 making a strong base which has set the stage for the next leg of up move in coming months. Further, the move above Rs 345 would accelerate the upward momentum, analysts said.
According to the ICICIDirect report, among momentum oscillators, weekly RSI has resolved above its nine period’s average indicating momentum returning in the stock. “We expect the share price to head towards Rs 390 in coming months as it is the implication of a breakout from 10 week base formation (345-300) as projected from breakout level of Rs 345,” it said. The brokerage recommends buying the shares in the Rs 332-338 range with a target price of Rs 388 and stop loss of Rs 314, implying an upside of 12%.
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