Stocks to buy: DLF, Indian Hotels shares may rally soon, analysts see as much as 13% upside potential
Domestic markets continue to dance between gains and losses, remaining rangebound. S&P BSE Sensex on Tuesday was trading flat with marginal losses at 55,900 while the NSE Nifty 50 index was up with minor gains at 16,680. India VIX, the fear gauge of domestic stock markets, tanked in the previous session but was again above 20 levels today. Amid the uncertain market environment, ICICI Direct has picked two stocks that they believe will rally 10-13% in the next three months. The stocks are DLF and Indian Hotels.
The stocks have been filtered through ICICI Direct’s three-factor model for stock filtration through Quantitative Analysis. Here, analysts have picked stocks from the futures & options universe and strained them based on the delivery pick up in the last two weeks, measured their 30-day and 60-day volatility and then filtered them based on the Frequency distribution pattern.
Target price: Rs 385
DLF share price is down 11% so far in 2022 to now trade at Rs 342 per share. Analysts said that DLF has shown significant accumulation in its price distribution pattern. “Stock daily returns are largely distributed from -2% to 3%. Furthermore, despite the volatility, positive counts are higher than negative counts, which is a positive sign,” ICICI Direct said. In terms of delivery, no major delivery activity was seen despite profit booking in April-May 2022, which analysts say, is a positive sign.
“The 60-day volatility for the stock has almost tested 30 day volatility levels suggesting stability in the stock and limited downsides. We expect the stock to continue its upward bias while momentum is likely to be seen,” ICICI Direct said. Buying has been advised in the Rs 327-335 range with a 3-month time frame. Stop loss at Rs 300 has been recommended.
Indian Hotels: BUY
Target price: Rs 267
Hospitality stock Indian Hotels has zoomed 29% in 2022 to date, outperforming Nifty which has tanked 6%. In recent months, analysts say the stock has shown a noteworthy resilience. “The stock has shown significant resilience in intermediate market corrections and no major delivery based selling was seen,” analysts said. On the delivery side in the last couple of weeks, ICICI Direct said that the stock saw below average delivery despite the selling pressure suggesting the exiting of weak hands. “It is near its support zone of Rs 230. However, we believe the Z score has reached near its zero line. We expect the fresh delivery at the support zone.”
The 30-day volatility has moved near its 60-day volatility due to the recent down move being seen in the stock. Going forward, volatility is expected to subside and the ongoing momentum may continue in the stock. Buying has been suggested in Rs 227-232 range with a stop loss at Rs 208 per share.