ICICI Direct in its recommendations dated today has given a 'Buy' call on the scrip of auto major Maruti for a target price of Rs. 9150. This from the current price implies a potential upside of over 12 percent. The stock closed today's trading session at a price of Rs. 8125.6, while the price at recommendation had been Rs. 8158 per share.
Buying range for Maruti
The brokerage for the given target suggests a buy in the price range of Rs. 8100-8180.
Derivatives and Quantitative outlook
The auto space has underperformed and was a major laggard recently. Maruti remained largely range bound in the last one year. However, going ahead, we expect relative outperformance in the heavily beaten down stocks from the auto sector. Recently, Maruti has been witnessing a short covering rally from its major support zone of |Rs. 7200-7500
On the F&O front, short positions in the stock have declined considerably in the last 10 trading sessions as stock prices remained in action and were able to perform in line with the markets. Meanwhile, the stock has been able to hold its Put base of 7500, indicating buying support at lower levels.
ICICI Direct’s take on Maruti Suzuki
The brokerage believes fresh addition in the stock will trigger another round of up move in it. On the options front, the stock has the highest Call option base at 7800 followed by the 8500 strike. As the stock has started trading above Rs. 8000 levels, closure of positions is evident at this strike with positions moving to higher OTM strike. We expect continued upsides in the stock in the coming sessions. At the same time, the Put open interest base is strengthening at the 7500 and 8000 strikes, which can act as strong support on downsides. The stock witnessed noteworthy delivery based activity in early August to till now.
Further, as of now, the stock has witnessed notable delivery volumes at the level of Rs.| 7600-7800, which is a crucial support level for the stock. Since accumulation was seen in this stock in the last couple of months, we believe downsides are limited in it and positive momentum is likely to remain intact in the stock above the mentioned levels.
The above stock has been picked from the brokerage report of ICICI direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.