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Top bets for an overbought market: Five stocks that can still shine

April futures of Dish TV India, Larsen & Toubro, RIL, United Spirits, and Wockhardt are garnering strong build-up in open interest in the derivatives segment.

, ET Bureau|
Updated: Apr 05, 2017, 07.57 AM IST
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Barring United Spirits and Dish TV, which are seeing build-up of bearish bets, rest of them are seeing build-up of positions on the long side.
Barring United Spirits and Dish TV, which are seeing build-up of bearish bets, rest of them are seeing build-up of positions on the long side.
Indian stock markets are at an all-time high and stocks with potential for strong upside are hard to come by in this overbought market. ET takes a look at stocks that can rise further in the near term based on the build-up in the equity derivatives segment

April futures of Dish TV India, Larsen & Toubro, Reliance Industries, United Spirits, and Wockhardt are garnering strong build-up in open interest (OI) in the derivatives segment. Barring United Spirits and Dish TV, which are seeing build-up of bearish bets, rest of them are seeing build-up of positions on the long side.

DISH TV INDIA
Reports of Reliance Jio preparing to enter into the direct-to-home (DTH) service space spooked investors as they feared it will become a threat to Dish TV's business. Technical charts indicate that after breaking its weekly support of Rs 105, the stock is headed further south to Rs 93 in the near term, said Chandan Taparia, derivative analyst at Motilal Oswal.Brokerage Macquarie, however, remains bullish on Dish TV. Jio's TV foray is unlikely in 2017 and even if it happens in the next one to two years, disruption in cableDTH space will be much lower than the telecom industry, said Macquarie.

UNITED SPIRITS
The Supreme Court's ban on sale of liquor within 500 metres of state and national highways hit the stock recently, which is down 10% in the last one month. The ban is likely to weigh on volumes as well as earnings going ahead, analysts said. “USL's volumesrevenues over 1QFY18 (AprilJune) could be impacted to the extent of 10%-15% even as industry players strive for a balanced outcome,“ said Citigroup in a report, maintaining `sell' rating. Taparia of Motilal Oswal said the stock has broken the support of Rs 2,125 and is likely to weaken further to Rs 1,970.

L&T
Consensus Rating: 35 Buy5 Hold 2 Sell L&T tested 18-month high level on Monday after Jefferies raised target price on the stock by 14.3% to Rs 2,000 and maintained `buy'. Jefferies said L&T management's focus on lowering working capital and asset monetisation will yield results in 12-36 months. Jefferies added that the company will see additional benefits from macro tailwinds of industrial capex in FY18.The stock has gained 23% so far this year, beating Sensex which is up 12%. A derivative analyst with a domestic brokerage said while the immediate resistance is near Rs 1,700, the stock has potential to re-test its lifetime high of Rs 1,892.95 that it had hit in March 2015.

WOCKHARDT
Traders took bullish bets in the pharmaceutical company after the company said that the US Food and Drug Administration has agreed for abridged clinical trials for its antibiotic molecule. The stock has fallen 21% in the last one year due to ongoing issues with quality compliance at its manufacturing plants. However, analysts see the stock continuing to rise at least in the near term due to the abridged clinical trials news. Technical analysts see the stock rising to Rs 830 in the near term once it rises above the immediate resistance level of Rs 777.

RELIANCE INDUSTRIES
Better-than-expected subscriber base at 72 million boosted sentiment in the stock, which scaled a fresh nine-year high on Monday. Credit Suisse raised target price on RIL by 3.3% to Rs 1,240 as the subscriber base represents over 60% conversion to paid subscribers from free, compared to expectation of 30% conversion. The brokerage retained 'neutral' rating. “The stock has underperformed for almost eight years and now its investment phase is over and reaping period has started. It can rise to Rs 1,800 in one-and-a-half years,“ said AK Prabhakar, head of research, IDBI Capital.

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