Stocks to buy: KEC International, TCS among top four picks by SMC Global for this week, eyes 14-18% upside at TP

Stock market today: Indian stock market benchmarks —Nifty 50 and Sensex—extended their gains for the third consecutive session on Tuesday, July 16, driven by heavyweight information technology (IT) stocks amid prospects of a US interest rate cut in September and a strong quarterly earnings outlook.

The frontline indices opened on a firm note and hit intra-day record highs in the first half of the session. However, losses in Reliance Industries and Kotak Mahindra Bank restricted gains and dragged indices from the day's highs.

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Sensex and Nifty have been on a record-breaking run since Friday as foreign investors have turned net buyers in Indian equities amid growing hopes of a rate cut by the US Fed by September. Encouraging quarterly results by blue-chips have also supported the rally despite high valuation concerns.

Sensex hit its fresh record high of 80,898.3, and the Nifty 50 scaled a fresh peak of 24,661.25 during the session. The 30-share pack closed 52 points, or 0.06 per cent, higher at 80,716.55, while the Nifty 50 ended at 24,613, up 26 points, or 0.11 per cent. This was also the fresh closing high for both indices.

In the current market scenario, domestic brokerage firm SMC Global Securities has released its top four stock picks for this week. The brokerage has selected the quality stocks on technical as well as fundamental parameters. The stocks have robust fundamentals and are well-placed to yield good returns for investors in the next one-year time frame, according to the brokerage.
 

Weekly Stock Picks by SMC Global Securities

Let's take a look at the top four technical and fundamental stocks for this week by brokerage SMC Global Securities:

1.KEC International: Current Market Price (CMP): ₹887.35; Target Price: ₹995, Upside: 14 per cent

During FY24, the company's order book stands at a record level of ₹37,000 crore which gives it visibility for the next six to eight quarters. According to the management, the company is witnessing substantial opportunities of over Rs. 25,000 crore for domestic market projects, most of which are already floated and will be awarded in the next few quarters. 

The civil business is also reporting strong growth, fueled by robust execution across all segments. The brokerage expects that the stock will see a price target of Rs. 995 in 8 to 10 months, based on itscurrent P/BV of 5.47x and FY25 BVPS of Rs. 181.95.
 

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2.Vardhman Textiles: CMP: ₹558.30; Target Price: ₹614; Upside: 18 per cent

The ambitious expansion and modernization plan is scheduled to be completed within the next two years. By augmenting its operational capacity and adopting modern technologies, Vardhman anticipates achieving better business synergies and gaining a competitive advantage in the market. Raw material and forex risks pose the key upside risks to the growth trajectory.

The company plans to invest in both solar and wind farms in order to increase its reliance on renewable energy. Its initial target appears to be a jump from the current 2-3 per cent to a much more substantial 25-30 per cent green power usage.

Additionally, the modernization efforts are poised to enhance productivity across business operations, enabling the company to meet the growing demand effectively. Thus, the brokerage expects that the stock will see a price target of Rs.614 in 8 to 10 months on a target P/BV of 1.80x and FY25 BVPS of Rs. 341.30.

3.BirlaSoft Ltd

The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at 647. In the recent past, the stock formed a Double Bottom pattern around 565 levels and gave a sharp bounce back to regain a fresh Bullish momentum above its 200 days exponential moving average on daily charts. Since then, the stock has gone into a consolidation phase as prices were seen fluctuating in range of 660-720. 

At the current juncture, a fresh breakout has been observed in the stock after a series of prolonged consolidations lasting more than four weeks. Rising volumes, along with positive price action, suggest further upside in the stock. The brokerage suggests that one can buy the stock in the range of 720-730 for the upside target of 820-830 levels with SL below 660 levels.

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4.TCS

The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at ₹242. The stock has been consolidating in broader range of 3,700-4,000 from last more than three months with prices holding well above its 200 days exponential moving average on daily charts. 

Over the period of consolidation, the stock has formed an Inverted Head & Shoulder pattern. Last week, the brokerage observed a fresh breakout into the stock above the neckline of the pattern formation. The sudden spike in volume activity along with breakout suggests for further upside into the stock.

Therefore, the brokerage suggests that one can buy the stock in range of 4,100-4,150 for the upside target of 4,450-4,500 levels with SL below 3,900 levels.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.