While volatility spoils market momentum, analysts at ICICI Direct have used their stock filtration model to pick two shares that they believe have the potential to deliver 16-18% returns in the next three months.
NSE’s Nifty 50 has been trading volatile in recent weeks as bulls and bears play tug of war on Dalal Street. Amid rate hikes by global central banks, rising inflation, and escalating geopolitical worries, domestic markets are on the edge. While volatility spoils market momentum, analysts at ICICI Direct have used their stock filtration model to pick two shares that they believe have the potential to deliver 16-18% returns in the next three months. The brokerage firm has filtered stocks from the F&O space based on the delivery pick up, historic trends and volatility. The stocks picked are IndusInd Bank and Navin Fluorine.
Target price: Rs 1,078 per share
Stop loss: Rs 830
IndusInd Bank shares are flat so far this year with a marginal negative bias, showing resilience during the recent fall. “The stock has been exhibiting significant accumulation in its price distribution pattern. The daily returns are largely distributed from 0% to 2%. Furthermore, the right tail is significantly longer than the left tail suggesting positive bias prevailing in the stock, ”analysts at ICICI Direct said. They added that from a delivery perspective, the last couple of weeks saw below average delivery as the stock has been consolidating near its support zone of Rs 850-900.
IndusInd Bank’s 30-day and 60-day volatility have remained elevated due to volatile moves seen in the banking space. Analysts expect volatility to decline, giving fresh momentum to the stock.
Target price: Rs 4,625
Stop loss: Rs 3,610
Analysts said that chemical stocks have remained largely range-bound in the last three to four months while other sectors witnessed sharp profit-taking from higher levels. “However, after a round of consolidation, a fresh up move is likely to be seen in chemical stocks. Stocks like Navin Fluorine are moving out of the hurdle of Rs 3,950 levels, ”ICICI Direct said.
“From a delivery perspective, the last couple of weeks saw above-average delivery as the stock witnessed strong reversal from Rs 3500 levels,” they added. Analysts noted that the Z-score remained in the positive territory suggesting increased delivery volume along with recent upsides suggesting strong hands are accumulating the stock. Volatility is expected to decline for Navin Fluorine going ahead.