Federal Bank likely to double in next 12-18 months: Shrikant Chauhan, Kotak Securities

In a chat with ET Now, Shrikant Chauhan, Kotak Securities, says today we can enter into Nifty and we can keep a target of close to 8970-9000 on the higher side.

Edited excerpts:

Are you buying any of the indices at the current levels?

This time the market is going up mainly because of there is a lot of activity in stock specific news. It is very difficult to say ride with a select set of parameters but whenever the market is opening up with a gap, it is holding on to that. It clearly shows that there are a lot of buyers who are emerging on a day-to-day basis and there is a lot of short covering towards the end.

So based on the overall formation I am of the view that even at current levels we can look for adding Nifty which is currently at 8880-8890 levels. It is very close to its immediate highest levels of 8970 and the recent support level of 8830 is going to act as a very good support. So, there is a good amount of risk reward ratio. Today we can enter into Nifty and we can keep a target of close to 8970-9000 on the higher side.

Do you have any stock ideas?

I would like to go with Federal Bank. The overall private bank space is doing really well and this particular stock is close to fresh 52-week highs. In fact, it is at all time high levels and there is a massive performance for the stock. If we compare this stock with HDFC Bank, then it is performing since 2010. There is a good amount of relative outperformance and it is outperforming other stocks like Karnataka Bank and DCB. Even at current levels -- Rs 86-85 -- we can take long positions and we can keep a target of close to Rs 93-94 on the higher side. Based on monthly patterns I am of the view that this stock is going to double in the next 12-18 months of time.

What is your top call for the morning?

There is a lot of activity in all private banks but at the same time we cannot forget that pharmaceuticals are also doing well. I would like to go with Cadila Healthcare which is currently around Rs 443-445 levels. It is a classic triangular breakout formation and we are expecting stock is heading for the levels of minimum Rs 470-490 in the next couple of days. So at current levels the risk reward ratio is highly favourable, buy with a stop loss at Rs 435, keep a target of Rs 470.