2 ICICI Direct Stock Picks For Gains In 3 Months

Indian indices after having rallied for 7th straight day and now there is some correction owing to losses in IT and metal stocks. This is despite the headinds owing to Afghanistan crisis and taper tantrums issue in the issue. Now even as the market behavior looks positive, here are ICICI Direct picks for raking in short term gains:

1. HDFC Life Insurance:

The broking firm has set a target for the stock at Rs. 778, with a buying range between Rs. 680-693. From the current pricing of Rs. 716.65, this implies a return of close to 9% in a short term of 3 months.

After the upmove between October 2020-Feb 2021, the scrip saw retracement. Now as per the brokerage, the stock is regaining upward momentum after forming a higher base above 52 weeks EMA as seen during October 2020. Thereby offering fresh entry opportunity to resolve higher and eventually shift in a new orbit. We expect the stock to challenge the all time high and gradually head towards Rs. 778 levels in the coming months as it is the 138.2% external retracement of its past six months corrective phase (Rs.746- 656).

Key point to highlight is that retracement of the past is suggestive of the inherent strength in the scrip. HDFC life Insurance is a key player in the country's private insurance sector space. For now the company has a balanced product mix as against the earlier ULIP heavy product offering.

Higher claims cited to be a near-term concern

"HDFC Life currently trades at ~3.8x FY23E embedded value (EV), which is at a premium compared to its peers. Second wave of pandemic has led to elevated claims in Q1FY22, while anticipated third wave remains a risk. However, this is a near term concern and valuation is seen to remain at premium given superior business franchise & continued focus on profitability", adds the brokerage firm.

2. Safari Industries:

The brokerage firm has betted on this luggage company and foresees a target price of Rs. 970. The stock currently quotes at a price of Rs. 847.7, implying gains of 14 percent.

As per the brokerage firm "the share price of Safari Industries has recently generated a breakout above the bullish Cup & Handle formation on the long term chart signalling continuanceof up trend. The stock, in last seven weeks, has been consolidating in range of Rs. 840-710 above bullish Cup & Handle breakout area. It is currently on the cusp of breaking above last seven week's range signalling strength and offers a fresh entry opportunity o We expect the stock to maintain its current up trend and head towards Rs. 970 levels in the coming months as it is the confluence of the previous all time high of CY 2018 and the measuring implication of the last seven week's range breakout(840-710). "A shallow retracement highlights a robust price structure o Weekly 14 period RSI is in up trend & is seen rebounding taking support at its nine period average, thus validating positive bias", added the brokerage firm.

Disclaimer:

The above 2 stocks are taken from the brokerage report of ICICI Direct and should be construed as investment advice.