Technical Trade Call: Top 12 New Year Stock Picks For 2024 By Axis Securities

With NSE/BSE listed firms surpassing the $4 trillion mark, the Indian economy remains a "star performing" economy in comparison to other emerging countries in 2023. The Indian market performed well in 2023, yielding gains of 18% and 19% for the Sensex and Nifty, respectively.With the Nifty Midcap 100 and Nifty small-cap 100 generating outstanding gains of 44% and 53%, respectively, the broader market surpassed the Sensex in terms of performance.

The equity market will remain turbulent in 2024 due to important events such as the interim budget, general election, anticipation of a FED rate cut around May or June, full-year budget around July following the formation of a new government, RBI policy, and US election in November. For the new year 2024, the brokerage firm Axis Securities is bullish on 12 stocks and has selected its top technical trade calls for the year.

2024 Technical Market Outlook

"Nifty and Bank Nifty have decisively broken out its previous year's high and registered an all time high at 21759 and 48636 respectively. Indices are in strong uptrend across the time frame forming a series of higher tops and bottoms representing bullish sentiments. The chart pattern indicates that if Nifty is likely to experience increased buying momentum, propelling the index towards the 23000 to 23500 range. On the flip side, if the index drops below 21500, it is likely to experience profit booking, potentially pushing the index down to the 20800 to 20300 range," the brokerage further added.

In the medium term, a critical support level lies within the range of 20500-20000, marked by a confluence of factors including a gap area between 20500-20300, the 20 Weekly SMA at 19960, and the transformation of previous resistance into support due to a change in the principle of polarity. This support zone presents an opportunity for the accumulation of quality stocks. The recommended strategy involves accumulating stocks in the portfolio during dips. It's worth noting that the range between 20800-20500 is expected to provide robust support, potentially paving the way for Nifty to reach the 23,500 level by the year 2024, Axis Securities mentioned in a note.

Nifty 50 CY24 Projection

Nifty analysis since March 2020 (i.e.7511) highlights six instances of a 10% decline, with each followed by an average 25% return in subsequent rallies before a correction ensued. Following a recent 7% correction, with Nifty declining from 20222 to 18837, applying the aforementioned analysis suggests a projection for Nifty in CY24 around 23500. In the medium term, a critical support level lies within the range of 20500-20000, marked by a confluence of factors including a gap area between 20500-20300, the 20 Weekly SMA at 19960, and the transformation of previous resistance into support due to a change in the principle of polarity. This support zone presents an opportunity for the accumulation of quality stocks, said the brokerage firm Axis Securities.

Stocks To Buy In 2024

The brokerage firm Axis Securities has initiated buy calls on the below 12 stocks based on technical analysis.

Divi's Laboratories

Rec. Price: 3850-3730 | Target: 4185-4450 | Upside: 10%-17%

Technical outlook

The Nifty Pharma Index achieved a notable 32% YTD performance, surpassing the October 2021 swing high of 14938. The monthly chart consistently exhibits a higher high-low pattern, confirming a strong uptrend. The stock exhibits an inverted head and shoulders pattern breakout, signalling the potential initiation of a medium-term uptrend. Stock is holding above short-term upward sloping trendline and 20 monthly Exponential Moving Average(EMA). Indicating postive momentum. Anticipating further upward momentum, we project the stock price to target the range of 4185-4450, aligning with the 50% and 61.8% Fibonacci retracement levels of the decline from 5425 to 2740.

Fundamental outlook

Divi's Laboratories Limited manufactures pharmaceutical products. The Company offers generic drugs, ingredients, and their intermediates. Divi's Laboratories serves the healthcare sector globally. Custom Synthesis: Divi's has launched Sacubitril as a CS product, adding incremental volumes to exports, given that the company has initiated shipments to innovator (Novartis). With Sacubitril expected to face generic competition the US in 2025/26, it will be a limited-period high earnings stream for Divi's. Sacubitril could potentially contribute USD $100-120 Mn revenue p.a. to Divi's. Generic APIs: Divi's is targeting products with a cumulative addressable market size of USD$ 20 bn, going off patent in FY23-25E - expect launches to start from FY24. In Contrast media - two APIs being produced exclusively for innovators, it could add USD$ 65-75 Mn incremental revenue to the company. It is expected over a longer period business has capability to perform better.

GAIL (INDIA)

Rec. Price: 145-140| Target: 179-195 | Upside: 19%-37%

Technical outlook

The Nifty Energy Index has successfully breached a multiple resistance zone at the 29000 level, triggering a robust rally post-breakout and is anticipated to sustain its upward momentum, signaling a potential continuation of the uptrend. On a quarterly chart, GAIL experienced a broader consolidation within the 130-50 range. This quarter, the stock broke above the upper boundary of the consolidation, signaling the initiation of an uptrend. Anticipating a resumption of the upward trend, we project the stock to ascend towards 170-195, reflecting an 80-point consolidation difference added to the breakout level.

Fundamental outlook

The company supplies more than 65% of total gas in Fertilizer sector, more than 50% of gas consumed in Power sector and almost 60% of total gas consumption in GCD, India. The company has undergone a capex of Rs. 2,460Cr in Q2FY24 where the management is guiding increase in gas volume transmission at 120mmscmd for FY24 and 132mmscmd for FY25.

Grasim Industries

Rec. Price: 2100-2040 | Target: 2320-2450| Upside: 12%-18%

Technical outlook

GRASIM has been in an uptrend on a quarterly chart since the beginning of 2020. Following a rally, it entered a consolidation phase between 1900 and 1300 from the end of 2022. Recently breaking above the consolidation zone, GRASIM is poised to continue its medium-term uptrend. On the monthly chart, the stock is establishing a higher high-low formation, maintaining a positive bias and holding above the medium-term uptrend. Anticipating a sustained uptrend, the stock is expected to move towards 2320 and potentially advance further to reach the 2450 level.

Fundamental outlook

Grasim Industries Limited is the flagship company of the Aditya Birla group, it ranks amongst India's largest private sector companies. On standalone basis, GIL's core businesses comprise of viscose Staple fibre (VSF), caustic soda, speciality chemicals, rayon-grade wood pulp (RGWP) with plants at multiple locations. It is also the holding company of UltraTech Cement Ltd, Hindalco Industries, AB Fashion, AB Capital and Vodaidea. At CMP total investment value of GIL in these companies stands at Rs 2.06 lakh Cr and valuation of standalone business at Rs 1.15 lakh Cr which is at 44% discount to its investment value. The company has also ventured into Paint business with capex of Rs 10,000 Cr . Grasim is aiming for the number two position in the paints sector.It has unveiled the the brand name of its paints business, 'Birla Opus'. The market launch of Birla Opus is scheduled for Q4FY24. Grasim will offer a full suite of high-quality products in the decorative paints segment. The current estimated value of India's decorative paints industry is Rs 70,000 Crore. The paints industry is witnessing double digit growth year-on-year driven by rising consumer aspirations and the government's push towards 'Housing for All'. This is expected to add higher value to the business moving ahead.

Housing & Urban Development Corporation Ltd

Rec. Price: 120-110. | Target: 148-165 | Upside: 29%-43%

Technical outlook

Nifty Financial Services index shows a strong uptrend, forming higher high-low patterns and holding above the medium-term trend. The recent breakout above 21000 suggests a continuation of the upward momentum. On a quarterly chart, HUDCO has broken above the multi-year swing high at 78, established at the end of 2017, signaling the continuation of the previously established uptrend. The breakout in volume activity signals an increase in market participation, indicating a surge in interest and potential momentum. The stock is anticipated to ascend towards 148 and is poised for a potential further advance, targeting levels around 165.

Fundamental outlook

HUDCO is a Schedule-A Mini Ratna, CPSE with 53 years of standing as a premier techno-financial organization in housing and urban development sector. It operates pan-India through a network of 21 regional offices and 11 development offices. The Company has been funding a wide array of housing and urban infrastructure projects ranging from EWS/LIG housing to water supply, sanitation, roads, bridges, airports and to even metro rail.

In H1FY24, strong disbursement growth translated into healthy advances growth of 7% YoY. Yield on loans has improved from 9.25% in H1FY23 to 9.34% in H1FY24. However, in H1FY24, higher increase in cost of funds (i.e by 20 bps YoY) as against the increase in yield (i.e 9 bps YoY) led to marginal decline in margins by 8 bps YoY. In H1FY24, HUDCO reported improvement in asset quality wherein GNPA improved from 3.8% in H1FY23 to 3.36% and NNPA improved from 0.6% in H1FY23 to 0.49%. With better operating performance and improved asset quality, HUDCO reported PAT at Rs. 897 Cr for H1FY24 ( Up by 11% YoY).

JSW Steel

Rec. Price: 870-845 | Target: 985-1030 | Upside: 15%-20%

Nifty Metal, breaking out of an ascending triangular pattern on the monthly chart since the start of 2022, is anticipated to sustain its medium-term upward momentum post-breakout. The stock mirrored the formation of Nifty Metal, displaying an ascending triangular pattern since the beginning of 2022. With a recent breakout above the pattern at the 850 level, it signals a continuation of the uptrend. The stock is anticipated to join the expected metal rally following the breakout. We expect a continuation of the bullish trend post-breakout, we forecast the stock price to gradually ascend towards 985-1030, reaching the projected target.

Fundamental Outlook

By FY25, the company plans to expand its capacity to 38.5 MTPA. It will be expanding its largest single location steel plant in Vijayanagar, Karnataka from the current 12.5 MTPA capacity to 19.5 MTPA by FY25. JSW Steel plans to expand its steel production to 50 MTPA by end of this decade by entailing total capex of Rs 1 Lc Cr. The company is trading at 12 Month Forward P/B of 2.5x (long term average of 1.6x).

Maruti Suzuki India

Rec. Price: 10000-9900 | Target: 11000-11500 | Upside: 11%-16%

Technical Outlook

Nifty Auto index has delivered an impressive 44% YTD return, showcasing a strong uptrend and is poised to sustain its upward momentum. On a quarterly chart, Maruti has formed a rounded bottom pattern and successfully broken out above the same at the 10,000 level. The stock is anticipated to continue participating in the overall rally of Nifty Auto following a breakout. Anticipating sustained upward momentum post-breakout, we foresee the stock heading towards an upside target of 11000-11500 levels.

Fundamental Outlook

The company is also looking to add 1Lc units capacity at Manesar by Apr '24. To meet the market demand MSIL board has approved adding 1mn units capacity in addition to the existing capacity 2.25 mn in the long term. With strong visibility over EV launch in FY25E and renewed focus on fuel efficient models such as CNG/hybrid plus strong line-up for SUVs we expect MSIL to regain its lost market share (despite short term weakness in the hatchback segment).

NOCIL

Rec. Price: 270-260 | Target: 300-325 | Upside: 13%-23%

NOCIL has broken above the 248 level on the quarterly chart, confirming the breakout from a Descending Triangle pattern in place since the start of 2021, indicating a potential continuation of the medium-term uptrend. The principle of change in polarity suggests that the previous resistance level at 200 is expected to transform into a support level, reinforcing its significance in the current market dynamics. Anticipating upward movement, we expect the stock to reach 300, representing a 38% Fibonacci extension of the recent rally, with potential to challenge the recent swing high of 325.

Fundamental Outlook

NOCIL faces short-term challenges as a global situation continues to evolve and demand for its product continues to remain weak in the medium term. The company is ambitious about increasing its market share over the long term and expanding into adjacencies. The company is currently operating at 65% capacity utilisation in Q2FY24. This 65% capacity utilisation is carried out before debottlenecking. Exports contributed 30-35% of the overall revenues. Various external problems such as geopolitical tension, recessionary trends and China's aggressive dumping have affected sales volumes and realisation in Q2FY24. The company is working on new tie-ups with upcoming capacities to support growth in the medium term. This can trigger a new leg of growth for the company as it expects to capture market share from other players.

Patanjali Foods

Rec. Price: 1550-1490 | Target: 1835-1950 | Upside: 21%-28%

Nifty FMCG is in a robust uptrend, delivering a 26% YTD return. The quarterly chart reveals a higher high-low formation, signaling strong upward momentum. The stock has entered a larger consolidation phase, forming an ascending triangular pattern since mid of 2021. Breaking above the consolidation at 1500 this month, it is poised for an uptrend following the pattern breakout. The monthly strength indicator RSI is in a bullish mode and holding above its reference line indicating positive bias. We expect the stock to sustained upward momentum following the breakout, we project a target range of 1835-1950 for the stock.

Fundamental Outlook

Patanjali oil business was impacted on account of volatility in commodity prices, however management expects oil business is likely to see profitability in H2FY24 and maintain its EBITDA margins guidance of 2-4% over long term. Food and FMCG business continues to remain strong on back of distribution expansion and new product launches. Long term growth driver - premiumisation, distribution expansion and foray into new categories.

Punjab National Bank

Rec. Price: 90-85 | Target: 105-113 | Upside: 20%-29%

Nifty PSU Bank index has broken above a multiple resistance zone around the 4500 level, a level not seen since 2011. PNB established a support base at the 26 level, undergoing a two-year consolidation before successfully breaking above said level. The stock is currently demonstrating an upward-sloping channel pattern, having recently found support at the lower band and is now advancing towards the upper band, suggesting potential bullish momentum. The monthly strength indicator RSI is in a bullish mode and holding above its reference line indicating positive bias. We expect the stock to move towards 105 and may eventually head towards 113 level.

Fundamental Outlook

The bank's global advances stood at Rs 9.4 Tn with RAM advances (Retail, Agri and MSME) constituting ~55% of the portfolio, the balance being corporate loans. The global deposits for the bank stood at Rs 13.1 Tn with CASA Ratio at ~42.2%. PNB's GNPA in Sep'23 stood at 6.96%. The banks has highlighted that the quality of loans sanctioned/disbursed post-COVID has lower delinquencies. Thus, the slippages from the post-COVID pool are expected to remain low.

Rashtriya Chemicals and Fertilizers

Rec. Price: 150-142 | Target: 185-200 | Upside: 27%-37%

RCF underwent a broader consolidation within the 145-25 range. This month, the stock broke out above the consolidation zone and is poised to witness an uptrend following the breakout. The increase in volume activity at the breakout signifies heightened market participation, underlining increased interest and potential momentum at the breakout point. The quarterly strength indicator RSI is in a bullish mode and holding above its reference line indicating positive bias. Following the consolidation breakout, the stock is anticipated to maintain upward momentum, targeting the range of 185-200.

Fundamental Outlook

RCF operates in two business divisions that is Industrial and Fertilizers. It produces industrial chemicals at both its units Thal and Trombay. During the year, Company produced approx. 5.79 lakh MT of various major industrial chemical products. Company has enhanced the production of Suphala NPK (15:15:15) by installation of additional spherodizer and associated system. During FY23, highest ever production (6.382 Lakh MT) of Suphala (15:15:15) was achieved. Company is setting-up liquid Nano Urea plant of 75 KL per day at RCF Trombay unit using indigenous technology, developed by M/s IFFCO. The company could benefit from an expansion of its NPK fertilisers base due to the strong demand and dependence on imports in the country.

Voltas

Rec. Price: 960-930 | Target: 1055-1170 | Upside: 12%-24%

BSE Consumer Durables Index, in an uptrend since 2021, recently broke above the swing high at 47440, indicating a potential continuation of the upward momentum. Voltas experienced profit booking after reaching a top at 1356. Finding support at 785, which aligns with the 61.8% Fibonacci retracement of the rally from 427 to 1356, the stock has formed a medium-term support base. After consolidating for almost a year, the stock broke out above the range, supported by strong volume, signaling a reversal of the trend. The stock is anticipated to reach 1055 and potentially advance further towards the 1170.

Fundamental Outlook

The company holds the market leadership position in the room air conditioners (RAC) segment of 21.6% in FY23. It operates in unitary cooling products (UCP), Electro-Mechanical Projects & Services (EMPS) and Engineering Products & Services (EPS) segments contributing revenue of 69%, 25% and 6% respectively.

Wipro

Rec. Price: 455-442 | Target: 530-570 | Upside: 18%-27%

Nifty IT index consolidates within 32,000- 26,000 levels since mid of 2022. Recent breakout above the consolidation zone suggests the initiation of an uptrend. Wipro, mirroring the Nifty IT index, entered consolidation since mid-2022 within the 445- 360 range, supported by an increase in volume. Anticipating a strong uptrend in Nifty IT, Wipro is poised to participate in the IT rally post-breakout. Expecting continued upward momentum, our projection for the stock price targets the range of 530-570, in alignment with the 50% and 61.8% Fibonacci retracement levels from the decline spanning 740 to 352.

Fundamental Outlook

Wipro management has taken cost optimization efforts which help them to gain long term sustainable operating margins. Wipro deal pipeline in FY23 and H1FY24 remained strong despite of having near term challenges.Wipro won many large transformation deals despite uncertainty and across verticals like BFSI, Communication, manufacturing, Automobile. This healthy deal pipeline will help to improve revenue visibility for FY24E and FY25E.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.