Union Bank of India, Sundaram Fastners: Why Ashika sees 14% upside in these two stocks

Domestic brokerage firm Ashika Stock Broking has picked up Sundaram Fastners and Union Bank of India as its top picks for this week which can deliver up to 14 per cent return in the near term. The brokerage sees a strong upside potential on these two counters on both technical and fundamental parameter. Here's what Ashika said about these two stocks:

Sundaram Fastners | Target Price: Rs 1,100 | Upside Potential: 12.6%
Sundram Fasteners is witnessing strong traction from its domestic and global OEMs, driven by a recovery in automotive and non-automotive demand. The outlook remains positive going forward. The company has a robust long-term revenue visibility, given its strong relationships with OEMs, both in India and globally. During 2QFY23, it reported healthy revenue growth of 12.8 per cent YoY to Rs 1,402 crores, led by improved offtake from OEMs.

The stock has generated a breakout above the last three months range (Rs 790-970) signaling resumption of up move and offer fresh entry opportunity. The breakout is supported by strong volume signaling larger participation at the breakout area. The stock has recently rebounded taken support at the 100 days EMA, currently placed at Rs 917 and the rising demand line joining lows since April 2020 signaling a positive price structure. Hence one can expect the stock to maintain positive bias and head towards 1100 levels being the extended 138.2 per cent projected retracement of the last recognized decline (Rs 994-675)

Union Bank of India | Target Price: Rs 90 | Upside Potential: 14.2%
Union Bank of India reported healthy 2QFY23 numbers driven by healthy NII and other income and tax reversals, though provisioning remained elevated. Fresh slippages significantly moderated on a sequential basis. NII during the quarter grew by 10 per cent QoQ and 22 per cent YoY at Rs 8,310 crore led by a combination of robust loan growth and a 15-bps expansion in NIM to 3.15 per cent. The bank is performing in sync with the management’s guidance for FY23.

The stock in the recent period has generated a breakout from the rising channel formation which has been in the formation stage since the last 1.5 years. Buying demand is seen emerging in the stock after a base at the 50 days EMA, currently at Rs 75 and the upper band of the rising channel highlighting robust price structure. Among the oscillators the daily 14 periods RSI is in uptrend and has recently generated a buy signal moving above its nine periods average thus validates positive bias. The stock is likely to head towards 90 levels in the coming weeks.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)
 

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