Stocks to buy: Glenmark Pharma, NTPC shares may rally as much as 17% in next three months

Filtering stocks from the futures & options universe based on their three-factor model, analysts at ICICI Direct see potential upside in Glenmark Pharmaceuticals and state-run NTPC stocks. The domestic brokerage and research firm has picked the two stocks based on their delivery pick up in the last two weeks, historic volatility, and Frequency distribution pattern. Domestic markets, after having soared sharply earlier in the week, have been in a downward trend for the previous few sessions. On Friday, however, BSE Sensex and NSE Nifty 50 were trading with gains after RBI’s MPC kept rates unchanged.

Glenmark Pharmaceuticals: BUY
Target price: Rs 550 per share | Rally: 16%

While pharma stocks have remained range-bound in the last few months, analysts believe Glenmark pharma, after a round of consolidation, could move up. “Stocks like Glenmark Pharma are moving out of the long-prevailing hurdle near Rs 460 levels. 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,” ICICI Direct said. 

On the delivery front, the brokerage firm highlighted that after a round of cool-off, fresh delivery buying was evident in the stock. “It seems there is ongoing accumulation in the stock at every levels,” they said. Further, the 30-day and 60-day volatility continued to remain lower and almost at par with each other indicating range bound move of the stock. The target price hints at a 16% upside from Friday’s low. A stop loss of Rs 422 has been suggested.

NTPC: BUY
Target price: Rs 179 per share | Rally: 17%

Barring recent up-move, NTPC shares were largely flat from the beginning of this year till the end of March. “The stock is moving out of the hurdle of Rs 150 levels. The price distribution is also suggesting limited downward movement in the stock,” ICICI Direct said. 

NTPC shares have moved higher since the end of March and delivery has increased during this period. “Furthermore, the Z score remained in the positive territory indicating increased delivery volume along with recent upsides suggesting strong hands are accumulating the stock,” analysts added. The 30-day volatility has moved higher than the 60-day volatility, believe it will subside in the days to come and ongoing momentum may continue in the stock. The set target price implies a 17% upside from Friday’s low of Rs 152 per share. A stop loss of Rs 132 has been advised.