Stocks to buy: Federal Bank, Biocon among top four stock picks by SMC Global Securities for this week

Stock market today: Domestic equity benchmarks Sensex and the Nifty 50—hit fresh record highs on Tuesday, June 25, amid weak global cues even as the mid-and small-cap segments faltered. The Nifty 50 benchmark hit its fresh all-time high of 23,754.15, while the Sensex scaled its fresh peak of 78,164.71 during the session earlier today.  Sensex breached the 77,000 mark for the first time on June 10.

Nifty 50 closed 183 points, or 0.78 per cent, higher at 23,721.30, while the Sensex ended with a gain of 712 points, or 0.92 per cent, at 78,053.52. Both indices settled at their fresh closing highs. Due to losses in mid and smallcap indices, the overall market capitalisation of BSE-listed firms rose barely to about ₹435.8 lakh crore from nearly ₹435.6 lakh crore in the previous session.

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The biggest reason behind the rise in the benchmark indices on Tuesday was solid gains in the shares of banking heavyweights. The frontline indices posted their best day in more than two weeks. Financials gained two per cent and banks rose 1.7 per cent. The two indexes were the top sectoral percentage gainers.

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.Federal Bank: Current Market Price (CMP): ₹175.90; Target Price: ₹198, Upside: 12 per cent

The private lender's net-interest income (NII) improved 15 per cent to ₹2,195 crore in Q4FY24. According to the management of the bank, it is the strongest quarter with very good growth across all key parameters. The asset quality of the bank has been resilient and demonstrates the underwriting, monitoring and collection capabilities of the bank, according to SMC Global Securities. 

Asset slippage and regulatory provisioning on assets are among the key risks to the bank's growth trajectory. The bank is comfortably capitalized, and liquidity is also supported by a healthy retail deposit base. All these factors will help the bank achieve higher credit growth and margin improvement going forward. The brokerage expects that the stock will see a price target of Rs. 198 in 8 to 10 months on current P/BV of 1.48x and FY25 BVPS of Rs. 133.93.
 

2.Sapphire Foods: CMP: ₹1,577.65; Target Price: ₹1,846, Upside: 16 per cent

For FY24, Sapphire KFC added 88 new restaurant additions, Sapphire Pizza Hut opened 33 new restaurants and in Sri Lanka, it added 6 new restaurants. Sapphire Foods total restaurant count stood at 872 as on March 31, 2024 and it is on track to double its restaurant count by the end of the year

The company is focusing on operational efficiency by improving service levels and introducing late night deliveries. It is adding new restaurant and plans to double its restaurant count. The company is also investing both in marketing and improving or strengthening the consumer experience to revive Pizza Hut brand. 

The brokerage expects that the stock will see a price target of Rs. 1846 in 8 to 10 months on a two-year above P/BVx of 8.29x and FY25 BVPS of Rs. 222.65.
 

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3.Biocon Ltd

The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at 280. Over the past year, the stock has been consolidating within a broader range of 200-300, consistently staying below its 200-day exponential moving average (DEMA) on a weekly interval. 

However, over the past month, the stock has shown steady recovery, with fresh upside momentum emerging, as it has once again moved above the 200 DEMA, according to SMC Global Securities. On the broader charts, the stock has broken out of a prolonged consolidation phase. 

The increase in volume, combined with positive price action, suggests that the stock may be poised for its next upswing. The brokerage expects that one can buy the stock on in the range of 340-345 levels for the upside target of 390-395 levels with a stoploss below 310 levels.

4.Apollo Tyres Ltd

The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at ₹457. The stock recently experienced a steep correction, falling from its 52 week high of 557.90 towards 429 levels on the back of profit booking at higher levels, according to SMC Global Securities.

However, the stock has marked almost a V-shape recovery and once again reclaimed a move above its 200 days exponential moving average on daily charts. At current juncture, a fresh breakout has been observed above the “Inverted Head & Shoulder” pattern on the daily charts indicating a positive price action in upcoming sessions. 

Alongside rising volumes accompanied with a price momentum suggest a potential upside movement in the stock. The brokerage expects that can buy the Biocon stock in range of 495-500 for the upside target of 545-550 levels with a stoploss below 465 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.