Stocks
The Monetary Policy Committee decided to retain the repo rate at 6.5 percent on April 6, with a 5:1 majority, focussing on withdrawal of accommodation to ensure that inflation progressively aligns with the target while supporting growth.
The total repo rate hike by the Reserve Bank of India since May 2022 was 250 basis points with the objective of bringing inflation down to its target of 4 percent (+/- 2 percent).
Some experts expected one last rate hike of 25 bps on April 6, while others had forecast a long pause to assess the impact of earlier rate hikes on growth.
“This is in line with our expectations and possibly a best-case scenario and positive for the markets. The RBI has remained prudent as it evaluates the comprehensive effect of rate hikes that we saw over the last year,” said Divam Sharma, founder of Green Portfolio PMS.
Food inflation is a matter of grave concern for the RBI and it is willing to bend over backwards to slow inflation and get it back to the tolerance band, he said.
The RBI raised its growth forecast to 6.5 percent from 6.4 percent earlier, while the inflation forecast for the current financial year was lowered to 5.2 percent from 5.3 percent earlier, assuming an annual average crude oil price (Indian basket) of $85 per barrel and a normal monsoon.
But it feels the lag in the passthrough of input costs could keep core inflation elevated. Inflation as measured by the Consumer Price Index was 6.44 percent in February compared with 6.52 percent in the previous month.
Anil Rego, founder of Right Horizons PMS, said the unchanged stance signals that the RBI is confident of its projections and expects inflation to cool gradually.
Hence, Divam said there will be some respite for large debt companies, growth stocks, small and mid-cap space companies, and specific sectors like consumer durables and real estate in the medium term, thanks to the RBI’s decision to not hike rates.
The benchmark stock indices extended their upward journey for the fifth consecutive session amid volatility, with the BSE Sensex rising almost 52 points to 59,741 levels and the Nifty 50 climbing 19 points to 17,576 levels, at 14:01 hours IST.
Here is a list of rate-sensitive stocks that experts said can return up to 15 percent in the short term. The returns are based on the closing prices of April 5.
Expert: Viraj Vyas, technical & derivatives analyst, institutional equity, at Ashika Stock Broking
AAVAS Financiers: Buy | LTP: Rs 1,672 | Stop-Loss: Rs 1,580 | Target: Rs 1,900 | Return: 14 percent
The stock has been languishing since January 2022 and is trading in a falling wedge pattern. Usually, this is a reversal pattern (bullish in this context). The RSI (relative strength index) has given a positive divergence, as highlighted in the chart.
Although there is no strength now, the stock presents a low-risk-high-reward probability. After crossing Rs 1,730, some bullishness can push the stock towards Rs 1,900.
ICICI Bank: Buy | LTP: Rs 885 | Stop-Loss: Rs 840 | Target: Rs 980 | Return: 11 percent
The stock has endured a corrective leg from November 2022 and although it broke away from the falling trendline, the stock has not witnessed any follow-through beyond the Rs 880-875 zone.
The stock is consolidating in a narrow range of Rs 815-875 and a sustained breakout above Rs 880 is likely to inspire a move towards Rs 940-920.
Recent volume activity too shows stronger buyer interest near the breakout, making a high probability bullish setup provided it sustains above Rs 840-850.
AU Small Finance Bank: Sell | LTP: Rs 558 | Stop-Loss: Rs 585 | Target: Rs 540 | Return: 3 percent
The stock has broadly consolidated time- and price-wise since August 2021 and until recently, started forming lower highs and lower lows, breaking below the trendline around the Rs 600 mark.
The stock since then has headed towards Rs 585 and beyond, which shows bearish intent. On the RSI indicator, the stock is at 36, which denotes that it has been forming more lower lows and is in a bearish grip.
Expert: Jatin Gohil, Technical and Derivative Research Analyst at Reliance Securities
ICICI Lombard General Insurance: Buy | LTP: Rs 1,093 | Stop-Loss: Rs 1,049 | Target: Rs 1,178 | Return: 8 percent
In mid-March, the stock registered a new 52-week low of Rs 1,049 and moved sideways thereafter. A bullish divergence in short-term indicators signals that the stock may bounce back, utilising the prior consolidation.
On the higher side, the stock may face a hurdle at around its prior point of polarity (Rs 1,116). As per the current set-up, the stock may surpass that hurdle easily and could move towards its 200-day SMA (simple moving average) of Rs 1,178.
In case of a decline, the stock will find support around its 52-week low.
Muthoot Finance: Buy | LTP: Rs 990 | Stop Loss: Rs 940 | Target: Rs 1,100 | Return: 11 percent
After a falling channel breakout, the stock retested its extended upper band and resumed the up-move. Continuing its prior daily rising trend, the stock rose to a one-and-half-month closing high on April 5.
Key technical indicators are in favour of the bulls in the medium term as well as the short-term timeframe charts.
The stock has the potential to move towards its 200-day SMA of Rs 1,039 initially and the psychological level of Rs 1,100 subsequently.
On the lower side, the stock may respect the extended upper band of the channel.
PFC: Buy | LTP: Rs 157 | Stop Loss: Rs 149 | Target: Rs 172 | Return: 10 percent
In the last week, the stock respected its upward sloping 20-week EMA (exponential moving average) and breached its prior falling trend. Later, the stock extended gains and rose to a 12-day closing high.
The positive momentum may continue, which could lead the stock towards its long-term hurdle zone of Rs 168-172. The key technical indicators reversed from the oversold zone and gave buy signals.
In case of any decline, the stock may find intermediate support at around its 50-day EMA, which is currently Rs 150.
Expert: Rohan Shah, Head of Technical Analyst at Stoxbox
ICICI Bank: Buy | LTP: Rs 885 | Stop-Loss: Rs 854 | Target: Rs 955 | Return: 8 percent
The stock plunged about 16 percent from a life high, declining from Rs 958 to Rs 796 in late January, after which it traded in a tight range. In this process, the stock recently witnessed a potential breakout from the Master Candle Pattern, with the price moving above the 20-week EMA after a good amount of time, highlighting a bullish momentum.
Also, the price decline was arrested at around its previous resistance level, which denotes polarity into play and highlights a robust price structure. Momentum indicator RSI has surpassed 50 levels with a bullish crossover, validating the bullish bias in the price.
Thes stock has the potential to scale higher towards Rs 930, followed by Rs 955, with a protective stop-loss of Rs 854.
Aditya Birla Capital: Buy | LTP: Rs 155 | Stop-Loss: Rs 146 | Target: Rs 173 | Return: 12 percent
The pattern analysis on the weekly charts exhibits a stage-2 breakout, followed by a potential base in the making. It witnessed a shakeout during the base formation and continued to hover above the breakout zone, which evinces another modest accumulation at elevated levels.
The accumulation base forming a potential Darvas box is captivating, while it trades a hair's breadth away from the ceiling near Rs 162.45.
It also shows a strong relative performance compared to the head index, which showcases further strength in the price action. We anticipate a potential upside till Rs 173 against a stop-loss of Rs 146.
Bajaj Finance: Sell | LTP: Rs 5,761 | Stop-Loss: Rs 6,000 | Target: Rs 4,920 | Return: 15 percent
The stock has been under pressure for many weeks, and the price has tumbled more than 25 percent since its September 2022 highs. On the price pattern front, the stock has registered a breakdown from a contracting triangle pattern, which denotes that the dominance of bears is likely to persist.
The stock has been trading below all key daily moving averages (20, 50, 100, 200), which indicates a bearish trend and lack of strength. For the past couple of weeks, the price has been consolidating at a 38.2 percent retracement level (Rs 5,650) from its prior advance from Rs 1,783 to Rs 8,050.
We sense another round of selloff once the price decisively trades below Rs 5,650. Going ahead, if the price trades below the mentioned levels, it will open the way for Rs 5,335 and Rs 4,920, with a stop-loss of Rs 6,000.
Expert: Rupak De, Senior Technical analyst at LKP Securities
HDFC Bank: Buy | LTP: Rs 1,654 | Stop-Loss: Rs 1,615 | Target: Rs 1,725-1,776 | Return: 7 percent
The stock has given a swing high breakout on the daily chart, suggesting a rise in bullish bets. Besides, the stock has moved above the critical moving average on the daily timeframe.
The momentum oscillator RSI (14) is in a bullish crossover. Over the short term, the stock is likely to move towards a higher level. On the higher end, resistance is visible at Rs 1,725, above which further upside movement can happen. On the lower end, support is placed at Rs 1,615.
Tata Motors: Buy | LTP: Rs 427 | Stop-Loss: Rs 417 | Target: Rs 445-460 | Return: 8 percent
The stock has given a falling trendline breakout on the daily chart, suggesting a rise in optimism. Besides, the stock has moved above the 200 DMA, which points towards a positive trend.
The momentum indicator is in a bullish crossover. Over the short term, the stock is likely to move towards Rs 460. On the lower end, support is placed at Rs 417.
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