BSE Sensex and NSE Nifty 50 are expected to witness heightened volatility this week as global markets sit and wait for what the US Federal Reserve FOMC decides.
BSE Sensex and NSE Nifty 50 are expected to witness heightened volatility this week as global markets sit and wait for what the US Federal Reserve FOMC decides. So far this week Sensex and Nifty have swung between gains and losses while selling from foreign investors continues. India VIX is above 26 levels. Analysts suggest taking a stock-specific approach during these times. Domestic brokerage firm ICICI Direct has picked two stocks that analysts believe have the technical strength to perform well in the near term. The brokerage firm has picked ITC and Graphite India, expecting somewhere between 12-15% upside.
ITC: Buy
Target price: Rs 265 per share
Upside: 12%
Analysts at ICICI Direct have picked ITC as their quat pick with a three-month timeline. The stock is expected to rally, helped by short-covering by investors. ICICI Direct said that Nifty is expected to move into a consolidation phase now where stocks like ITC could be the next major mover. “It is likely to retest its October highs in the coming weeks,” they said. “ITC has seen significant closure of open interest where the rest of the market is witnessing continued short additions,” they added.
ICICI Direct said that ITC has been witnessing the closure of open interest since the December series with current open interest one of the lowest seen in almost a year. “The current up move in the stock is backed by significant delivery based activity, which is the highest seen since last October when ITC made highs near Rs 260 levels,” ICICI Direct said. The time frame for the trade has been given as 3 months.
Graphite India: Buy
Target price: Rs 568 per share
Upside: 15%
Graphite India is also among the stocks picked by ICICI Direct. Analysts said that buying demand emerging from long term average offers fresh entry opportunity with a favourable risk-reward set up. Charts suggest the Nifty metal index is on the cusp of a breakout. “We expect metal stocks to continue their relative outperformance. The preferred pick within the midcap metal stock is Graphite India, which has already seen a price/time correction and is currently witnessing buying demand from the major support area of Rs 430-460, thus offering fresh entry opportunity with a favourable risk-reward set up,” ICICI Direct said.
Graphite India is expected to head towards Rs 568 per share in the coming months as it is the confluence of the high of January 2022 and 50% retracement of the previous major decline. The trade is given for a three-month time frame.