Domestic benchmark indices have scaled fresh highs repeatedly in the last handful of trading session but broader markets have corrected. Going stock precise in the hunt for returns, domestic brokerage and analysis frim ICICI Direct has filtered two stocks that could hand investors almost 20% returns in the next 3 months. The brokerage firm has filtered stocks utilizing its 3-aspect stock filtration model, deciding on scrips based on pickup in delivery, historic volatility and historic stock shopping for patterns out of the Futures & Options universe.
ICICI Direct has narrowed its search for desirable shopping for possibilities to 162 stocks in the F&O universe. The brokerage firm has compared the two-week delivery choose-up of these stocks to the last 3 months delivery pattern. Then the delivery Z-score is compared, a greater Z-score indicates a greater raise in delivery per unit of danger. The stocks filtered are furthered filtered to verify for historic volatility. “If the standard deviation comes lower, it suggests the lower pattern of historical volatility, which, in a way, suggests the accumulation in the stock,” ICICI Direct mentioned. “Thus, combining with delivery Z-score, frequency distribution of the stock returns and historical volatility pattern, we can filter stocks that can be given from a positional perspective and can be outperformers,” they added.
Tata Motors
Buying variety: Rs 295-303
Target: Rs 360 | Stop loss: Rs 268
While the auto sector has remained variety-bound, Tata Motors has managed to outperform peers, according to ICICI Direct. “The price distribution is also suggesting limited downside movement in the stock. The majority of the reading for the stock is in the 0-2% range,” they added.
The brokerage firm mentioned that from a delivery point of view, the stock saw robust delivery based action lately. “After significant correction from Rs 360 levels, fresh delivery buying was evident at support zone of Rs 280-300. It seems like there is ongoing accumulation in the stock at these levels,” the report mentioned. On the volatility front, the 60 Day volatility for the stock has tested the 30-day volatility levels suggesting stability in the stock and restricted downsides. Analysts think the stock may perhaps continue surging greater with momentum most likely to be seen in the coming weeks. The brokerage firm has offered a 3-month time frame for the trade that could give 19% upside from existing levels.
Indian Oil Corporation
Buying variety: Rs 104-106
Target: Rs 125 | Stop loss: Rs 94
Indian Oil has underperformed because the initially half of June, falling 10% to date. However, ICICI Direct highlighted that the stocks witnessed a pull-back from its assistance zone lately. “The stock has been exhibiting significant accumulation in its price distribution pattern. The daily returns are largely distributed from 0% to 1%,” they added.
From a delivery point of view, analysts mentioned that the stock has seen under-typical delivery as the stock was consolidating at the assistance zone. “However, the Z score has started moving up, indicating increased delivery volume along with recent pullback suggesting strong hands are accumulating the stock,” the report mentioned. On the volatility front, the 30-day volatility has been low and the 60-day volatility was also cooling down. “With 60-day volatility cooling-off further, we believe momentum may be seen in the stock and it may move higher in coming weeks.” The stock could give 20% upside return from existing levels. The trade has a 3-month time frame.