Defence Stocks: Brokerage recommends buying this Maharatna stock, advises selling HAL and BEL shares
Hindustan Aeronautics and BEL in overbought zone, says analyst; Mazagon Dock poised for rebound.
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12:14 PM IST
Defence stocks in focus: Defence stocks are in the limelight on Tuesday after sharp market losses in the previous session. As the Sensex fell more than 500 points and the Nifty closed below 25,000 with Middle East tensions and a US airstrike on Iran, investors are now seeking opportunities in sectors.
Selective action in the defence sector can provide traders with tactical plays, says Jigar S Patel, Technical Research Analyst at Anand Rathi.
HAL (Hindustan Aeronauticals Limited)
Hindustan Aeronautics Ltd (HAL) has risen almost 70 per cent in the last 2–3 months, and technical levels indicate the stock is now in an overextended zone. While fundamentals are still strong, short- to medium-term traders should lock in profits in the Rs 5,000 - 5,100 levels. Patel says that there can be a phase of correction or time-based consolidation, which will provide better entry points later on.
Mazagon Dock
Anand Rathi has made a new buy recommendation in Mazagon Dock Shipbuilders Ltd. The stock has made a solid base in recent times at the Rs 3,300–3,400 range that coincides with the S3 Camarilla pivot point on intra-day charts. Bullish divergence in momentum indicators adds strength to the buy idea, with the target for upside set at Rs 3,600. Buy in the Rs 3,330 - 3,360 range, with a tight stop-loss of Rs 3,150 on a closing basis.
BEL (Bharat Electronics)
Bharat Electronics Ltd (BEL) too has rallied 76 per cent in recent months. Although the order book of the company continues to be strong, technicals indicate limited short-term upside. Anand Rathi analysts suggest profit-booking at Rs 410–430 levels and waiting for a pullback or consolidation phase before fresh entries.
Sector outlook
With increasing geopolitical tensions, defence stock volatility will continue. Traders need to adhere to tight stop-losses and steer clear of aggressive gambles. The emphasis has to be on disciplined position sizing, more so in high-beta counters such as HAL and BEL.
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