HDFC: (BEST ENTRY PRICE)

HDFC, as all of us are aware, is an institutional favourite and an essential stock for every long term investors' Portfolio. However, in this hard Interest Rate regime, it is essential to pick the right levels to enter. When we analyse the 2-year Price Charts it is observable that the 365 DMA has NEVER been broken except during the brief period 17/08/11 to 29/08/11 coincident with the recent European crisis and the US downgrade which may be taken to be exceptional events and not vitiating the overall macro trend. Even during this period the downside was max 5% below 365 DMA. Other than this, the Stock strongly rebounded from the 365 DMA on 5/9/2011. 365 DMA is currently 647.

If we look at the FUNDAMENTALS, I really think it is time to start looking closely at all rate sensitives since the Interest Rate Cycle is most likely peaking out and we do not foresee any aggressive Rate Hikes now.

Therefore, I would say that 625 levels is a reasonably sound bottom for the Stock and savvy Investors should start accumulating the Scrip in the 625-650 range. In the short term 697 seems to be a resistance on the upside but as I said earlier, a reversal in the Interest Rate Cycle will see the Stock Price running away.!!!!