ICICIdirect recommends 'Buy' on Kotak Mahindra Bank in the range of Rs 787-798 for target of Rs 910 with stop loss of Rs 735 on a closing basis for three months.
Commenting on the rationale, the stock broker said, ''After consolidating near 6,700 for the better part of the April series, the Nifty is in the process of making another move towards heavily shorted Call strikes of 6,900 and 7,000. Similar to the trend of the March and April series, the Bank Nifty is again outperforming and is currently trading near the highest Call base of 13,000.
We believe the current pre-election run up is likely to continue and banking stocks are likely to play a vital role on upsides, as the Bank Nifty is still over 3% away from its record highs. With private banking stocks being key contributors to Bank Nifty weightage, we believe private banks, especially ones that have not seen strong price performance, are likely to perform. Kotak Mahindra Bank is one such stock, which has been continuously consolidating near the record highs.
In the third week of September, 2013 quite significant volumes (higher weekly volumes since July 2011) were seen at Rs 780 levels in the stock. Later, it consolidated for six months and has taken out this level now. This will act as good support on declines. Eventually, the stock should move higher
The current open interest in the stock is pointing towards accumulation of long positions in the run up of the stock from Rs 755 to Rs 800. The OI has increased by 20% to 7500 contracts. This suggests the stock is likely to see an upwards bias in the May series at least till the election outcome.
In the delivery segment, the stock had seen a pick-up in delivery volumes in the price range of Rs 760-780. Thus, immediate support for the stock is placed near Rs 760.''
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