Hot Stocks | Healthy returns in HDFC Bank, Radico Khaitan possible in short term; here#39;s why

The Nifty50 is rising above its short and medium-term moving averages which is a positive sign and the participation from largecap counters is what gives confidence to investors.

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Vishal Wagh, Research Head at Bonanza Portfolio

The bulls roared on Dalal Street as the Nifty closed above 17,900. Except IT, pharma, and power, all other sectoral indices ended in the green with auto, bank, metal, realty and oil & gas indices up 1-2 percent. The BSE Midcap index added 0.36 percent, while the Smallcap index ended on a flat note. The Nifty50 closed at 17,925 and the BSE Sensex at 60,233.

The Nifty has given a breakout of descending broadening wedge formation and the next resistance will be around 18,000-18,050 levels. On the downside, supports have been now placed at 17,750-17,800. The index is traveling above its short and medium-term moving averages which is a positive sign and the participation from largecap counters is what gives confidence to investors.

Though the global markets had mixed cues ahead of the release of the US Federal Reserve meeting minutes, on the domestic front traders are more hopeful with the RBI’s decision to keep the reverse repo rate unchanged in the next policy amid an increase of corona cases.

The major contribution has come from Bank Nifty which has given nearly 4,000 or 12 percent from the recent bottom in the last couple of weeks. The move seems to continue if it breaks and sustains above 38,000 levels.

Here are two buy calls for next 2-3 weeks:

Radico Khaitan: Buy | CMP: Rs 1,266.75 | Stop-Loss: 1,140 | Target: Rs 1,434 | Return: 13.2 percent

The Radico has given strong move in October. Post that it has seen a strong consolidation in last two weeks. Stock has shown breakout in last week of December and through back seems completed now. Stock seems ready for next round of up move.

Relative strength index (RSI) (14,9) is currently reading around 67 and sustaining above the moving average. It has created a higher bottom near 61 levels. At the same time, moving average convergence divergence (MACD) (9,24,9) is also sustaining in Bullish mode. On a relative basis, it is consistently outperforming the major indices.

The said up move will be as equal to the area of consolidation which is around 220 points from the high of Rs 1,214. So the given target will be Rs 1,434.

HDFC Bank: Buy | LTP: Rs 1,564.85 | Stop-Loss: Rs 1,496 | Target: Rs 1,664 | Return: 6.3 percent

HDFC Bank has shown a strong bounce back from December low. It has managed to break out above the downward sloping trend line. It has also broken above all major 20, 50 & 100 DEMA. It is a heavy weightage stock from Nifty as well as Bank Nifty. It is currently outperforming both indices.

RSI (14,9) is currently reading around 65 and sustaining above the moving average. It has successfully sustained above the major resistance level of 45. At the same time, MACD (9,24,9) is also in Bullish mode.

As HDFC Bank is resuming uptrend the target will be of a new high. But there is small resistance around Rs 1,664 levels which will be tested first in the next couple of weeks.

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