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Budget 2018: ITC, Sun Pharma among top trading calls ahead of Budget

Zee Business brings you four stocks that are not only smart Budget plays, but also hold strong fundamentals for a longer horizon.

Budget 2018: ITC, Sun Pharma among top trading calls ahead of Budget
Buy ITC at a strike price of 280. Image source: Reuters
Written By: ZeeBiz WebTeam
Updated: Wed, Jan 31, 2018
08:35 am
ZeeBiz WebDesk
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With one day to go for Budget 2018, Zee Business brings you four stocks that are not only smart Budget plays, but also hold strong fundamentals for a longer horizon.

1) ITC

Buy ITC at a strike price of 280 

280 CALL available @ ~8 
Target: 14
Stoploss: 5

Rs 19,200 to be invested 
Maximum Reward: Rs 14,400
Maximum loss: Rs 7,200

Spot price target: Rs 290
Spot price stoploss: Rs 270

Rationale:

i) 66% cash delivery 
ii) Household consumption to see a pick-up: Economic Survey
iii) Rural demand push
iv) Stock hasn’t participated in recent market rally (Just 3% return in three months)
v) No surprise likely on indirect taxation in Budget 2018

2) Petronet LNG

Buy Petronet LNG at a strike price of 260 

260 CALL available @ ~6.5
Target: 12
Stoploss: 3.5

Rs 19,500 to be invested
Maximum reward: Rs 19,000
Maximum loss: Rs 9000

Spot price target:  Rs 266
Spot price stoploss: Rs 248

Rationale:

Budget 2018 to focus on oil & gas sector
Buying seen in Feb, March futures 
Buy trades seen in PSUs 
Improvement in quarterly and yearly earnings 
Gas import cost has gone down 

3) Sun Pharma 

Buy Sun Pharma at a strike price of 600 

600 CALL available at ~24
Target: 44, stoploss: 15

Rs 26,400 to be invested
Maximum reward: Rs 22,000
Maximum loss: Rs 9000

Rationale:

More allocation to health sector expected in Budget 2018
Relief from USFDA on Halol plant expected; inspection due in February
Revision in corporate tax in Budget 2018, if happenes, will improve earnings
Generic market is being expanded
Regulatory concerns in US are being resolved

4) ONGC

Buy ONGC at a strike price of 210 

210 CALL available at ~6.6
Target: 11, stoploss: 4.5

Rs 25,000 to be invested
Maximum reward: Rs 16,500

Rationale:

Buying seen in Feb futures
Brent crude above $65 improves company’s margins
Crude prices may increase by 12% in near future 
Merger with HPCL

Average target: Rs 220

Disclaimer: Investment/trading calls expressed here are for informational purposes. Readers are advised to check with certified experts before investing.