ICICI Direct has handpicked three shares as its ‘Gladiator stocks’ that find strong technical support on the charts along with robust fundamentals.
Domestic headline indices, Sensex and Nifty recently reached fresh all-time highs once again. Dalal Street has been in control of bulls for the majority of the trading sessions since April last year. Although there have been corrections, none has lasted long enough or been sharp enough to invoke fear among investors. However, treading cautiously when markets reach record highs might be the correct way forward. Amid this, domestic brokerage and research firm ICICI Direct has handpicked three shares as its ‘Gladiator stocks’ that find strong technical support on the charts along with robust fundamentals.
Target price: Rs 405 per share
Tata Motors share price has seen a sharp recovery from March 2020 lows when it tanked to trade at Rs 64 per share. “The auto index is seen breaking above its last five month’s consolidation signalling resumption of up move. Among large-cap auto stocks, we remain constructive on Tata Motors as it formed a higher base above the major support area of Rs 280 and is seen resuming its primary uptrend, thus offering a fresh entry opportunity,” ICICI Direct said in a report. They added that Tata Motors recently registered a breakout above the last four month’s consolidation range of Rs 342- 279, thus opening upside towards Rs 405.
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Fundamentally, Tata Motors is leading the charge among domestic auto OEMs in the transformation of electrification. The company is a market leader in the domestic CV space which ICICI Direct believes is set to witness an impending cyclical upturn following about two years of laggard performance. Tata Motors has also upped its game in the PV segment and garnered a strong favourable customer response. Buying is advised between Rs 348-358, with a stop loss at Rs 324. At current levels, the stock would need to jump 15% to reach the target price in the 3-month time frame.
Caplin Point Lab
Target price: Rs 780
The stock has performed well in the last few months, recouping past seven months decline in just 3 months. “We expect the stock to resolve higher and gradually head towards our earmarked target of Rs 780 in coming months as it is the confluence of 138.2% external of August 2020- March 2021 decline coincided with all-time high of Rs 785 recorded in August 2017,” the report said. The stock has support at Rs 598 apiece, they added.
Caplin Point has established itself in semi-regulated markets of Central America and is also one of the leading formulation suppliers in these regions. “After scripting a unique story by growing in uncharted territories, it is looking at growth in known markets. These new markets of South America and the US are a big opportunity but fraught with new challenges,” the report said. Buying is recommended between Rs 660-675, with stop-loss at Rs 598. The stock poses an upside potential of 14% from current levels in a 3-month time frame.
Target price: Rs 1,355
Recently, the stock has witnessed breakout with strong volumes, which are 6x the average 50 day volume of 11 lakh signalling strong participation and sustainability of uptrend, the report highlighted. Further, they said that the metal space has been regaining momentum, where Tata Metaliks has retested its three year breakout area and formed a higher base on elevated buying demand thereby offering fresh entry opportunity with a favourable risk-reward. The stock finds immediate support at Rs 1,020 as it is lower band of recent consolidation on a closing basis.
Tata Metliks is one of the key players in the ductile iron pipe segment with a healthy balance sheet. “Furthermore, strong return ratio profile (RoCE of 20% +) coupled with healthy cash flow reiterates our positive stance,” ICICI Direct said. The brokerage firm advises buying the stock between Rs 1,115-1,140 with a stop loss at Rs 1,020. The stock will have to jump 15% to reach the target price from current levels in a 3-month time frame.
(The stock recommendations in this story are by the respective research and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)