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Buy these stocks for a 10% upside on MSCI's new foreign ownership norms

The MSCI India index could see passive inflow to the tune of $2.5 billion due to this development
Morgan Stanley Capital Investment (MSCI) is set to implement the new regime on foreign ownership limits (FOL) in the MSCI Global Indexes containing Indian securities effective December 1, 2020. Based on an analysis by Ridham Desai, head of India research and India equity strategist at Morgan Stanley and Sheela Rathi, their equity research analyst, the MSCI India index could see passive inflow to the tune of $2.5 billion due to this development.

As per the new regime, where the FOL for securities in the MSCI India Equity Universe would be equal to the limit as per the automatic route except certain cases, Asian Paints, Britannia Industries, Larsen & Toubro, Nestle India, Maruti Suzuki India, Biocon, Hero MotoCorp, Mahindra & Mahindra, Jubilant Foodworks and Avenue Supermarts are among the 39 stocks Desai and Rathi feel that could be impacted favourably from the foreign limit increase. READ MORE

Of these, five stocks are staring at a potential 10 per cent upside from their current market prices over the next one month, technical charts suggest.

ACC Limited (ACC):  With a trendline breakout on the monthly chart around Rs 1,550 levels, the counter is set to rise further towards the Rs 2,000 mark. Weekly charts, however, suggest that mild profit booking could be witnessed around Rs 1,700 as the stock has repeatedly closed in the green in the current October series. That said, the trend is optimistic till ACC defends Rs 1,550 levels from a short to medium-term perspective. CLICK HERE FOR THE CHART

 

Muthoot Finance Ltd (MUTHOOTFIN): The stock has been resisting to cross the 100-days moving average (DMA). While it breached the moving average on the downside in September, it has reversed this trend. This momentum and reversal exhibits a strong rally towards 52–weeks high of Rs 1,405 levels with support at Rs 1,140 levels on a closing basis. CLICK HERE FOR THE CHART

 

IPCA Laboratories Limited (IPCALAB): IPCA Labs has tripled in the last one year from the lows of Rs 817. Moreover, the overall momentum is sharply positive as every dip in being bought into. The same scenario may continue till the stock defends Rs 1,800 levels, daily charts suggest. The counter has shown tremendous buying momentum in the overbought condition of the Relative Strength Index (RSI), illustrating that the counter can enter the uncharted territory of Rs 2,700 to Rs 3,000 levels in the sessions ahead. CLICK HERE FOR THE CHART

 

Bajaj Finance Limited (BAJFINANCE): After conquering the 200-DMA in August, 2020, the stock witnessed stiff resistance, forcing it to slip below Rs 3,260 -- its 200-DMA. The aggressive selling pressure, however, ended near 100-DMA, placed around Rs 2,969 during October. The stock is now attempting to conquer 50-DMA with Moving Average Convergence Divergence (MACD) on the verge of conquering the zero line, indicating a possible breakout towards Rs 4,000 levels. The trend will remain positive till it defends Rs 3,170 levels on a closing basis. CLICK HERE FOR THE CHART

 

ASIAN PAINTS LTD (ASIANPAINT): With a formation of "Higher High, Higher Low" pattern along with a trendline support, this counter is set to march upwards in the sessions ahead. From a broader perspective, the upside bias should prevail and the stock should move towards Rs 2,500 levels so long the price stays above Rs 2,050 levels on a closing basis, as per the daily chart. CLICK HERE FOR THE CHART



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