Buy KEC International For Target Price of Rs. 232

Pee Vee
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Buy KEC International For Target Price of Rs. 232

Postby Pee Vee » Fri Mar 31, 2017 2:38 pm

Buy KEC International

Reco Price (Rs) 148, Previous Target (Rs) 176, New Target (Rs) 232

We had recommended a BUY on KEC International in our management meeting note released on June 30, 2016 with a target of Rs170 and revised it to Rs.176 in our result update released on February 01, 2017. The target was achieved in previous week trading session, thus yielding a return of 18.9%. We believe next financial year (FY18) to be a strong year on the back of strong order book, execution of orders delayed in FY17 and revival in non-T&D businesses. We upgrade our target price to Rs232 and recommend investors to hold the stock for this extended target.

Index Options Strategy: Nifty - Likely to get stuck in range trade

We recommend to book full profits on short straddle trade, as our first target on spread of 80 points has meet, risk reward to hold the trade from current levels is not lucrative. ~Approx. 75 points captured till date in the spread, as given with inflow of 145 points.

Nifty continue to find support near 9020 on spot levels and face hurdle on upside at 9150-9200 zone. Maximum profit on the strategy would be at 9150 level on March 30th expiry with 145 points maximum gain in the spread. However given the narrow setup of options and huge arbitrage positions in derivative segment might propel wild swings on expiry day.

Technical Track

Nifty staged a pullback in previous session as it nullified Monday’s losses. On two occasions in recent past, bulls have survived by the skin of their teeth as Nifty managed to find support around 3-digit gann number of 901(0). Recent chart structure shows contracting price set-up (i.e. lower highs and higher lows) between trading band of 9220-9010 levels, thereby testing patience of bulls and bears and making trading environment more challenging from traders perspective. Nifty reclaimed 9100 on account of improved market breadth. However, despite all the recent upheavals, market continues to be stuck in a limbo. During this process of non-trending phase, deterrent trend is visible among sectoral indices which is leading to a stock/sector specific theme on Dalal Street. On options front.

Derivatives Diary

· Nifty futures reclaim 9100 on account of fresh longs. Rollover for Nifty futures on D-1 day was seen at 45.61%. SGX Nifty is indicating positive opening near 9140 zone.

· Massive open interest additions were seen at 9100 put and unwinding at 9100 call. Maximum base on call for the current series remains at 9200 strike. Price volatility likely to inch higher ahead of expiry of March derivative contracts and financial yearly closing.

· FIIs index futures long/short ratio was seen at 2.69x with addition of ~34.5K long and ~30k short futures positions.

· Nifty continues to be in a trading band of 9200-9000 levels, stock specific theme is likely to be in action.

IIFL

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