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Published on 30/05/2020 10:11:46 AM | Source: ICICI Direct

Quant Pick: Dabur India Ltd by ICICI Direct

Posted in Broking Firm Views - Short Term Report| #Dabur India Ltd #FMCG #Trading Report #ICICI Direct

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Quant Pick

Buy Dabur India in the range of | 425-445, Target: | 525; Stop Loss: | 388; Time frame: Three month

 

Derivatives and Quantitative Outlook…

* Consumption stocks have been flavour of the markets and the recent correction in the space provides a good risk reward opportunity. Dabur India has seen a sharp reversal after March declines and almost tested its life-time highs in April itself. However, since then, the stock has remained under pressure. The recently announced quarterly results have triggered almost year high volume action in the stock. We believe there is ample room for upsides in the stock from current levels

* Unlike most stocks, the open interest in Dabur has not declined significantly in the market sell-off seen since February. Despite closure of 27% OI from February to March series, gradual OI build up was seen in the stock. The May series has started with the highest OI seen since February. We believe short positions were formed in the stock, which are likely to be covered considering renewed buying seen in it

* The stock has a major Call base placed at the 450 strike, which had, so far, acted as a resistance since mid-May. As the stock has been able to test these levels, closure of positions is likely to be seen in this ATM strike as these are shifting to higher strike of 500 in the ongoing series. The Put base is placed at the 400 strike followed by 430 strike indicating expectations of limited downsides

* Levels near | 420 have acted as strong support levels for the stock in the last one year. Apart from a couple of sessions in March 2020, the stock has stayed above these levels. In the last session also, significantly high delivery buying was seen in the stock around these levels indicating value buying. We believe it is likely to find a fresh uptrend

* Since 2009, Dabur has seen buying support whenever it has moved closer to its long term mean levels. Even in case of breaching, it has not spent much time below these and witnessed a quick reversal. Currently, the mean levels of the stock are placed near | 430. We expect the ongoing positive trend to continue in coming weeks

 

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