Stocks to buy this week: ICICI Bank, Kotak Mahindra Bank, YES Bank, Wipro, Tata Steel among 9 technical picks

The domestic market is teeming with positivity. Equity benchmark Nifty 50 is up about 7 per cent in December so far on account of strong buying by foreign portfolio investors amid robust macro numbers and the sustained fall of US treasury yields.

Experts believe this rally can continue with some occasional consolidation as valuations are stretched now.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services pointed out that two significant factors are driving the ongoing strong rally in the market. One, FIIs (foreign institutional investors) have turned big buyers having invested around ₹20,000 crore, including bulk purchases, in the last two weeks. Second, the rally is being driven by segments like banking and IT which were underperformers for quite some time.

An important point from recent market experience is that in the tug-of-war between FIIs and DIIs. The latter have been trumping the former consistently by buying from them when they sell and selling to them the very same stocks which they sold, at much higher prices, Vijayakumar observed.

"Global and domestic factors, except valuations, are favourable for the market. It makes sense to remain invested, particularly in large caps. Some profit booking can be considered in mid and small caps where valuations are very high," said Vijayakumar.

The market is expected to see healthy gains in the short term but one should not get carried away and bet on stocks with sound fundamentals and healthy technical indicators. Experts believe the below nine stocks can give healthy returns in the next three to four weeks. Take a look:

Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers

IRCTC | Target price: ₹900 | Stop loss: ₹719

For the last three to four months, IRCTC has been consolidating in the range of ₹630–750. Recently, it gave a clean breakout from the said range, which looks lucrative. 

The breakout on a weekly scale looks genuine since it is accompanied by decent volume. Additionally, it has taken out the one-year-old bear trendline. 

On the indicator front, the weekly RSI has taken out its previous swing high of 60 and is currently placed near 68 levels, along with the weekly DMIs looking positive, which confirms our bullish stance on the counter.

"One can buy the stock in the zone of ₹775-785 for an upside target of ₹900 and stop loss should be ₹719 on a daily closing basis," said Patel.

Kotak Mahindra Bank | Target price: ₹2,000 | Stop loss: ₹1,750

On the weekly timeframe, the inverse head and shoulder patterns are seen after decent consolidation between ₹1,700 and ₹1,790. These inverse head and shoulders are formed exactly near the potential reversal zone of the bullish bat pattern, and the 200 EMA (exponential moving average) is providing support below it, which is making Kotak Mahindra Bank a lucrative buy.

On the indicator front, both daily RSI and DMIs are displaying positive bias in the counter. "One can buy this stock in small tranches in the zone of ₹1,835–1,855 and another in the zone of ₹1,805–1,815 with an upside target of ₹2,000, and the stop loss should be placed near ₹1,750 on a daily close basis," said Patel.

YES Bank | Target price: ₹26 | Stop loss: ₹20

Since last month, YES Bank has gained some quick momentum and placed near the ₹22 mark. Recently, it took out its previous swing high with huge volume and successfully sustained above it. 

The most important part is that the five-year bear trendline has been violated, which confirms our bullish stance in the YES Bank.

On the indicator front, daily DMI and RSI hint at a bullish bias in the counter. "One can buy the stock in the range of ₹21–22 for a target of ₹26 and a stop loss of ₹20 on a daily close basis," Patel said.

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Shiju Koothupalakkal, Technical Research Analyst, Prabhudas Lilladher

KRBL | Target price: ₹405 | Stop loss: ₹345

The stock witnessed a decent correction from the peak of ₹470. After consolidating for some time near ₹345 and taking support near ₹342 of the rising trendline zone, it has witnessed a pullback to improve the bias, currently indicating a bullish candle pattern on the daily chart moving past the 50EMA level of ₹364. 

The RSI is on the rise, recovering from the oversold zone and is well-paced to signal a buy with much upside potential visible from the current levels.

"With the chart looking attractive, we suggest buying and accumulating the stock for an upside target of ₹405, keeping the stop loss of ₹345," said Koothupalakkal.

ICICI Bank | Target price: ₹1,240 | Stop loss: ₹980

ICICI Bank, after the decent spurt witnessed from the significant 200-period MA (moving average) of ₹930, indicated a clear breakout above ₹1,020. 

After a short consolidation witnessed in the last six to seven sessions, it maintained a strong uptrend to enter a new territory with fresh upside visible and it is set for the next upside targets of ₹1,110 and ₹1,240 levels in the coming days. 

Recently, it indicated a falling trendline breakout above ₹980, improving the bias and a further rise is expected.

"With much upside potential visible and with technical parameters well-poised, we expect a further rise so one can buy and accumulate this stock. Only a decisive breach below the ₹980 level shall weaken the bias," said Koothupalakkal.

Mahindra and Mahindra Financial Services | Target price: ₹325 | Stop loss: ₹272

The stock, after consolidation, made a big bullish candle pattern on the daily chart after a long time with decent volume and is moving past most of the important moving averages like 50EMA, 100-period and 200-period MA, improving the bias. 

The RSI, after the short consolidation, gave a spurt to signal a buy.

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Gaurav Bissa, VP, InCred Equities

Wipro | Target price: ₹480 | Stop loss: ₹425

Nifty IT gained strength last week with many of the large-cap stocks enjoying strong upside. 

Wipro has been one such name which witnessed a handsome upside. 

However, unlike the other IT majors, Wipro has been a laggard with consolidation seen in the last few months. 

It has now witnessed a consolidation breakout which can result in a fresh trend. This is also supported by the highest weekly volumes in a quarter. 

It has witnessed a bullish MACD crossover on weekly charts along with early signs of a buy signal in the Ichimoku system which can result in a strong uptrend.

Tata Steel | Target price: ₹146 | Stop loss: ₹128

Nifty Metal witnessed a strong breakout on the weekly charts which pushed many of the metal names into a new zone. 

Tata Steel has been in consolidation for a while now with some underperformance against its peers. It has witnessed a bullish triangle pattern breakout on the weekly charts which can give a strong thrust to stock price. 

The RSI is trading near its previous swing high of 70 which once crossed can increase the pace of momentum and a bullish MACD crossover on the weekly timeframe is likely to ensure the trend remains strong.

RBL Bank | Target price: ₹320 | Stop loss: ₹275

RBL Bank has been in a strong uptrend for the last few quarters with the consistent formation of higher highs and higher lows on the weekly charts. 

It witnessed a strong breakout retest at ₹220 which propelled the prices swiftly towards ₹280. 

The stock has recently witnessed a fresh three-year swing high breakout which can result in a move towards ₹350 level.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.