Tickers

Tuesday, 8 May 2012

LICHF Trading Buy Target :300


LICHF Trading Buy Target :300
Ø  LIC Housing Finance Limited  company provides housing finance services to individuals for purchase, construction, repair and renovation of new or existing flats and houses. The Company also provides finance on existing property for business, personal needs and gives loans to professionals for purchase,  construction of clinics, nursing homes, diagnostic centers, and office space throughout India.
Ø  For the last couple of days LICHF has been in a very narrow trading range of 250-260 after it collapsed from the recent highs of 277 post the 4th Qtr results. Normally good stocks when they go into a narrow range, eventually break out.
Ø  Looking at the fundamental rational behind the stock is that the last quarter was bad  mainly because of  sustained pressure on NIM which resulted in affecting the earnings outlook.  LICHF’s management believes that NIM has bottomed out. It expects NIM to trend back. The key drivers of improvement in NIM would be decline in cost of funds, re pricing of teaser loan book and increase in the proportion of developer loan book.
Ø  We feel that the major concerns for the stock are overdone as of now. The company expects to sustain the improvement in asset quality with a favorable base, earnings are likely to grow going forward.
Ø  Looking at the futures activity Stock has  Open Interest of 6.3mln shares (lowest in 52 weeks). Since expiry the OI has decreased nearly by 4.5%, with a price rise of 3%. We expect buying interest to re-emerge in the stock and fresh long positions to be taken in the near term.
Ø  According to us, from technical perspective RSI oscillator on daily chart is also showing some strength indicating upside momentum reliable.
Ø  We think the stock is overdue for a large rally. According to our systems the stock has given a buy on the intermediate charts (Daily Time Frames). There is a strong possibility it may move up sharply. We suggest going LONG on LICHF at CMP 261 level with Target of 300 with stop loss placed at 238.

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