Top Stock Recommendations: Dharmesh Shah of ICICI Securities suggests buying Tata Power and Oil India today

Stock Market News: The domestic benchmark indices, the Sensex and Nifty 50, started off Monday’s session on a positive note, led by financials following post-results gains in SBI Life Insurance and ICICI Bank.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, states that the persistent selling by FIIs, which is brought on by the rising US bond rates, is still the main cause of the market’s negative sentiment. As long as US bond rates are high—a decision that is made by US inflation data—this selling by FIIs in both stock and debt will continue to have an impact on the markets.

Following a five-day surge, the Sensex and Nifty 50, buckled under selling pressure on Friday as investors reduced their exposure to banking, and financial stocks amid mixed global cues.

Also Read: Nifty 50, Sensex today: What to expect from Indian stock market in trade on April 29

According to reports, traders stated that continuing outflows of foreign funds, a falling rupee, and rising global crude prices further weighed on sentiments.

On Friday, the 30-share BSE Sensex closed at 73,730.16 level, down 609.28 points, or 0.82%. The NSE Nifty 50 ended at 22,419.95, down 150.40 points, or 0.67%.

Senior Vice President of Master Capital Services Ltd, Arvinder Singh Nanda said that the key domestic and global economic statistics will have an impact on the market’s trajectory. The Fed Interest Rate Decision, the China Manufacturing (PMI), the Euro Zone (CPI) (YoY), the India Federal Fiscal Deficit (Mar) and Infrastructure Output (YoY) (Mar), the Company Q4FY24 results, and the ISM Manufacturing Prices (Apr) will be in focus next week.

Also Read: Stock market today: Sensex, Nifty 50 snap 5-day winning streak; mid, smallcaps hit record highs

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

The buying demand from the lower band of the rising channel helped the index recover last week’s losses and settle the week above the 22,400 mark. In the process, broader market Nifty Midcap and Small Cap indices staged a strong rebound and clocked a fresh all-time high. The key point to highlight is that domestic institutional investors’ (DII’s) have shown strength by absorbing the foreign institutional investors (FII’s) sell-off seen during the month of April-24 while discounting a host of global volatility owing to geo-political concerns said Dharmesh Shah.

“We believe Indian equities remain on a strong footing, which makes us reiterate our positive stance with the Nifty 50 target of 23,400 by the general election outcome with strong support at 21,700,” added Shah.

Also Read: Indian stock market: 7 key things that changed for market over weekend – Gift Nifty, US inflation to tech stocks rally

In the upcoming truncated week, Dharmesh Shah expects the Nifty 50 to challenge life highs of 22,800. The formation of a higher peak and trough means buying demand at an elevated support base that makes Shah revise immediate support upward at 22,100. Thus, any temporary breather should be used to accumulate quality stock in the ongoing Q4 earning season, Shah explained. His constructive bias is validated by the following observations:

A) Breadth continued to improve as the percentage of stocks above the 50-day EMA strengthened from 55% to 75%, highlighting broader market participation.

B) The India Vix (which gauges market sentiments) has plunged ~20% in the last week, suggesting receding market risk among market participants, which in turn bodes well for resolving the above ongoing consolidation in the Nifty 50.

C) Indian equities have a positive correlation with their global peers. The US market is forming a higher base above its all-time high, while the FTSE has clocked a fresh all-time high that bodes well for the continuation of the uptrend in the domestic market.

Also Read: Oil settles higher on Middle East supply woes, US inflation data limits gains; Brent at $89/bbl

Bank Nifty Outlook

Index staged a decent recovery from the lower band of the rising channel coincided with a 100-day ema amid oversold readings. Going ahead, we expect Bank Nifty to resolve higher and challenge the all-time high of 49,000. The Bank Nifty/Nifty 50 relative performance ratio chart indicates strong outperformance from Bank Nifty over the next 3–4 months. Since 2008, in all six instances where the relative ratio line turned up from a cycle low, Bank Nifty has outperformed by 5% over a three-four-month period. In the process, strong support is placed at 47,300.

Top Stock Recommendations:

Buy Tata Power Co Ltd in the range of ₹428–438 for the target of ₹485 with a stop loss of ₹398.

Buy Oil India Ltd in the range of ₹620–632 for the target of ₹730 with a stop loss of ₹580.

Also Read: Nifty 50 May series: 4 stocks where investors can park their money; do you own?

Disclaimer: The Research Analyst or his relatives or I-Sec do not have current/beneficial ownership of 1% or more securities of the subject company, at the end of 04/26/2024 (preceding date) or have no other financial interest and do not have any material conflict of interest.

The views and recommendations above are those of individual analysts, experts and brokering companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.