Federal Bank, Mishra Dhatu & Bajaj Electricals are among ICICIdirect's top 2023 technical picks

ICICIdirect has come out with its top technical stock picks for 2023. Among the nine stocks it recommended, the brokerage targets suggest potential upsides of 20 per cent and above for seven of the counters. They are Bosch, Federal Bank, Sundaram Finance, Bajaj Electricals, KEC International, Mishra Dhatu Nigam and Techno Electric & Engineering.

Bosch | Target Rs 22,000

ICICIdirect said the auto ancillary space continued its primary up trend. The brokerage is constructive on Bosch, which it believes may to outperform, as the stock has generated a breakout above long term supply line joining highs since CY15 (Rs 27,990), signalling turnaround after a long period of underperformance.

The stock, during 2022, consolidated and formed a higher base above 13,500, which is 50 per cent retracement of the previous major up move Rs 7,850-19250). It expects the stock to head higher towards Rs 22,000 in coming quarters as it is the 80 per cent retracement of 2017-2020 decline (25,240-7,850).

Bajaj Electricals | Target Rs 1,440

The BSE Consumer durables index has been consolidating in 2022  after strong rally of 2020-21, thus forming a higher base. Within the space, ICICIdirect likes Bajaj Electricals and finds its favourable risk-reward. The stock is currently placed near the key support area of Rs 1,000-1,100 as it is the confluence of rising 12 months EMA (currently at Rs 1,125) and 50 per cent retracement 2020-21 rally(Rs 263-1,588)

"We expect the stock to resume up move and head higher towards Rs 1,440 in coming quarters as it is the 80 per cent retracement of entire previous decline (Rs 1,588-Rs 858)," it said.

KEC International | Target Rs 598

Nifty Infra index hit a new high after previous year’s multi year breakout, indicating structural uptrend. In the power infra space, one of ICICIdirect's top recommendations is KEC, which is resolving out of a triangular consolidation pattern of past two years, indicating resumption of uptrend. Structurally, the share price has formed a strong base around Rs 350-370 zone,

which was earlier breakout level and rising 52-week average. ICICIdirect expects the stock price to extend its up trend towards Rs 598, which is 123.6 per cent external retracement of 2022 decline that coincides with triangle breakout implication.

Mishra Dhatu Nigam | Target Rs 295

The share price of Mishra Dhatu Nigam has recently generated a resolute breakout above 30-month triangular consolidation, with strong volume of more than double of its 10-month average volume of 0.2 crore share per week, signalling resumption of up move.  The stock has retraced its 28-month corrective decline (Rs 278-156) in just six months, signalling faster retracement and indicating structural turnaround.  Last six week’s breather towards the major breakout area provides fresh entry opportunity for target of Rs 295, as it is the range implication of two-year range (Rs 225-155), ICICIdirect said.

Techno Electric | Target Rs 410

The BSE power index gave a breakout above 2008 highs after decade long consolidation. Within power infra segment, Techno Electric is on the cusp of breakout from four year’s consolidation, indicating structural turnaround. The stock has witnessed renewed buying momentum over past few months and forming higher high- low, indicating steady uptrend. ICICIdirect expects rallies to further accelerate above the Rs 320 level, which acted as hurdle on numerous occasions.

The target of Rs 410 is projected based on 123.6 per cent external retracement of 2021 decline (Rs 362-224).

Federal Bank | Target Rs 168

The banking sector has been spearheading the ongoing bull run and ICICIdirect expects it to continue its outperformance as the Nifty Bank has recently generated a breakout above its 14-month range. Federal Bank is its top pick among midcap banking stocks.  The stock has recently generated a resolute breakout above its last five years range (Rs 127-36) as it resolved above 2017 highs (Rs 127), signalling a start of a new bull phase.

"We expect thrust from the recent breakout to lead the share price to Rs 168 in coming quarters as it is the price parity with the previous up move (Rs 84-129) as projected from September 2022 low of Rs 109," the brokerage said.

Sundaram Finance | Target Rs 2,890

The BFSI space has outperformed in 2022 while NBFCs are now catching up amid signs of interest rates nearing its peak. Sundaram Finance’s share price has given a falling channel breakout, signalling end of its 15-month corrective phase and resumption of uptrend. From a structural point of view, the share price has retraced its 2020-21 rally (Rs 982-2868) by 61.8 per cent over 15 months, indicating slower retracement that augurs well for long term price structure.

"We expect the share price to gradually head towards Rs 2,890, which is its 2021 high and remains good proxy for CV financing space," ICICIdirect said.