Super 7 Picks For February 2024: 2 Adani, 2 Tata, 3 Other Stocks Recommended To BUY For Short Term Gains

Two stocks each belonging to Adani Group and Tata Group are hot bets for February 2024. They are Adani Enterprises, Adani Total Gas, Tata Steel, and Tata Consultancy Services (TCS). Apart from them, Grasim, Hindalco and ITI are also attractive to buy. Brokerage BP Wealth has recommended these super seven stocks for buying for February month. Notably, 10 days have passed of the current month, and these stocks have already factored in their fundamentals, some even hitting new 52-week highs.

There is still potential for a single-digit upside in these stocks in the short term. Nevertheless, their long-term outlook is robust. Here are the technical and fundamental views from BP Wealth on these stocks:

Adani Enterprises: (TP: Rs 3,499, CMP: Rs 3,213.95, Potential Upside: 8.9%)

Technical View: The pattern analysis on the daily chart shows that the price action is trading with basing patterns over its former one. This indicates potential buying at higher levels and absorbing available liquidity at elevated levels. The improving price action is further backed by improving EPS strength and buyers' demand. The 50DMA trending with a positive curve further points out an improving medium-term trend.

Fundamentals: AEL's incubation portfolio includes three major emerging and scalable coal infra businesses, green hydrogen, airports, and roads, under wholly owned subsidiaries, ConneX, Adani Airports, and Adani Roads, respectively. The company's incubating businesses, comprising green hydrogen ecosystem, airports and roads, contribute 45% of the overall EBITDA. With strong operational performance in 9MFY24, the brokerage expects the performance to improve over the coming years as utilization rates increase and incubating businesses become more mature, enabling Adani Enterprises to rely less on outside capital.

Adani Total Gas: (TP: Rs 1,074, CMP: Rs 1,023.40. Potential Upside: 5%)

Technical View: The stock recently eventuated in a stage 2 breakout. Following the breakout, the stock has been consolidating with lower highs and currently trades near the breakout zone. The stock on multiple occasions has shown its resilience from slipping below the pattern support on a closing basis. The stock offers stronger support coupled with the pattern and 50DMA thereby offering a low-risk and potentially higher rewarding opportunity.

Fundamentals: ATGL's pricing strategy takes into account its own purchase cost, its margins, and the need for its CNG and PNG to be competitive over alternative fuels. With rising domestic gas prices, ATGL has revised its CNG and PNG (domestic) prices upwards in the last few months. However, even with increased prices, CNG and PNG continue to be competitive against alternative fuels and benefit from the favourable allocation of domestic gas for these segments. Also, ATGL's recent foray into electric mobility by launching EV charging stations across India through setting up a network of 1,500 charging stations along with the existing CNG infrastructure will generate additional topline going ahead. Additionally, ATGL has acquired capabilities to manufacture prepaid smart gas meters through a 50% acquisition in Smartmeters Technologies Ltd.

The brokerage believes that the acquisition will help the company to generate new revenue streams consistently in future.

Tata Steel: (TP: 152, CMP: Rs 141.30, Potential Upside: 7.6%).

Technical view: The pattern analysis on the weekly outlook shows that the price action has been trading with volatility compression as the price action inched closer to the pivotal resistance near the level of 139. This volatility compression is a potential sign of smart hands absorbing available supply in the market progressively with the rising price trend. The price action has staged a bullish breakout which further validates on a weekly closing above 139 levels.

Fundamentals: Tata Steel Ltd. is looking to capture India's infra boom by doubling the manufacturing of long steel products used in construction over the next six years. Furthermore, the steelmaker's subsidiary Neelachal Ispat Nigam Ltd. (NINL) is likely to expand its capacity to 5 mtpa from 1 mtpa and parallelly looking at Bhushan Steel's Angul plant to go from 5 mtpa to 6.5 mtpa as step 1 before moving to 10 mtpa. These projects will be taken to the board for finalization over the next six months and would help to reduce the cost and improve EBITDA further.

TCS: (TP: Rs 4,297, CMP: Rs 4,134.25, Potential Upside: 4%).

Technical View: With a series of higher highs and higher lows, the price action has completed the later half of the rounding bottom price pattern. The latter half saw the price trend with the formation of shrinking base patterns by means of time and price indicating potential accumulation by smart hands. The RSI across daily and higher timeframes are trading well above their median indicating thrust in the price momentum. The price action has also seen improving relative strength compared to the 50 index which is a positive sign.

Fundamentals: TCS Ltd.'s strategic emphasis on emerging technologies such as Gen AI, cloud, cyber resilience, and digitalization positions it as a leader in the market. The launch of Gen AI products tailored to industry value chains, SDLC reimagination, and responsible AI frameworks showcases TCS's commitment to staying at the forefront of technological advancements. Moreover, the company's ability to prioritize business-critical projects with immediate return on investment aligns well with client sentiment amidst uncertain economic conditions.

Grasim: (TP: Rs 2,258, CMP: Rs 2,168.95, Potential Upside: 4.1%).

Technical View: The pattern analysis on the weekly chart shows that the price action has been trending relatively stronger with higher high and higher low structures following the bullish breakout from an elongated pattern in the early week of September 2023. In the last couple of sessions, the price action witnessed a shakeout as it retraced back into the former base. However, the positive sloping 50DMA is anticipated to bolster immediate support.

Fundamentals: UltraTech Cement Ltd., which is one of the subsidiaries of Grasim Industries Ltd., reported strong quarterly results and is expected to perform positively in the upcoming quarter as well. The estimated increase in cement demand coupled with subdued operational costs are likely to improve the margins of the business going forward. After receiving the consent to operate the Panipat, Ludhiana, and Cheyyar plants, the company is all set to commence its paints business, "Birla Opus", in Q4FY24. The company is also in the process of establishing a sales and distribution network for the upcoming paint business. The brokerage believes that the company's venture into the paints business will provide scale and growth and reduce the cyclicality of the standalone business.

Hindalco: (TP: Rs 620, CMP: Rs 591.60, Potential Upside: 5%).

Technical View: Following a 38% steep rise from October lows, the price action witnessed a profit-booking rally. The profit-taking rally retraced 13.4% to the 50DMA, where it witnessed a sharp technical pullback. The price action has immediate support at its 20DMA and 50DMA. The 50 period volatility trades at lower levels indicating the diminishing probability of any unruly moves.

Fundamentals: Activities like a supply of aluminium products for Vande Bharat, and air conditioning manufacturing are being taken up by the company to have a first mover advantage in the downstream segment. As the demand in this segment is mostly catered by large numbers of unorganized players, the technical expertise, financial prowess, and brand recall of Hindalco is sufficiently equipped to be a dominant player in the downstream in the next few years. Hindalco has allocated a consolidated capex worth USD 3.1 billion towards setting up a new 600 Kt rolling mill facility in Alabama, Novelis. The facility will be state of the art, which will help the company to increase its footprint in the can recycling space and also increase its customer base in the automobile and aerospace field.

ITI: (TP: Rs 381, CMP: Rs 327.25, Potential Upside: 16.4%).

Technical View: Following the September low, the price action surged 171% and took a brief breather before it staged another bullish continuation breakout. The price action is anticipated to repeat the pattern following the retesting of its former breakout zone. This implies resilience to further drawdowns observed as profit-taking. The stock has also diminishing 50 period volatility hence the chances of any unruly moves remain less likely

Fundamentals: The accreditation received by ITI Ltd.'s EMC Lab from the National Accreditation Board for Testing and Calibration Laboratories (NABL) has significantly bolstered the company's position in the market. This accreditation reflects ITI's proficiency in detecting even the slightest anomalies in the electromagnetic and electrical operations of various products. With the lab's expanded testing scope, ITI Ltd. can now cater to a wider array of industries including industrial, commercial, information technology, telecom, and medical fields. ITI Ltd.'s expansion into the laptop and micro PC market marks a significant milestone, given the company's commitment to innovation and sustainability. With these products boasting reduced carbon footprint and power consumption, ITI Ltd. aims to tap into burgeoning markets while addressing environmental concerns.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, 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.