Stocks to buy or sell: Dharmesh Shah of ICICI Securities suggests buying HAL, Titan tomorrow – 20 January 2025 | Stock Market News
Source: Live Mint
Stocks to buy or sell: The domestic benchmark indices, Nifty 50 and Sensex, wrapped up the week on a downward note, indicating that volatility is still prevalent. On Friday, the Sensex finished at 76,619.33 points, a decrease of 423.49 points or 0.55%, while the Nifty 50 ended at 23,203.20 points, down 108.60 points or 0.47%. The Nifty IT sector experienced the most significant decline at 2.68%.
Analysts highlighted that selling by foreign portfolio investors (FPIs) is persistently exerting pressure on the indices. Furthermore, the forthcoming inauguration of Donald Trump is anticipated to introduce more fluctuations in the markets, as his initial executive actions will be watched closely to evaluate implications for tariffs and taxes.
Vinod Nair, Head of Research at Geojit Financial Services, mentioned that the market is likely to stay cautious in the near term because of moderate expectations for Q3, and ongoing foreign institutional investor (FII) outflows may lead to increased volatility. In the future, investors will closely monitor the policies and statements of the incoming US president, particularly regarding tariffs. Additionally, rising inflation in Japan or stricter policies from the Bank of Japan (BoJ) may negatively impact market sentiment.
This week, corporate earnings announcements are spearheaded by significant firms such as Dixon Technologies, L&T Finance, and Oberoi Realty on January 20, followed by Tata Technologies and Dalmia Bharat on January 21.
On January 22, investors will be keenly awaiting earnings reports from Polycab India, Persistent Systems, HDFC Bank, Tata Communications, Coforge, Hindustan Unilever, and Bharat Petroleum Corporation. The week wraps up with UltraTech Cement, Mphasis, Indus Towers, and Dr. Reddy’s Laboratories scheduled to report on January 23, as noted by analysts.
Market Outlook by Dharmesh Shah, Vice President, ICICI Securities
- Equity benchmarks extended losses over second consecutive week and settled the volatile week at 23,203, down 1%. In the process, broader market recouped intra-week losses and settled on a flat note. Sectorally, IT witnessed profit booking while beaten down sectors like PSU Bank, Metal bounced amid oversold conditions. The weekly price action resulted into doji star pattern, indicating narrow trading range amid stock specific action.
- We believe, the index is approaching the key global event (Trump Government’s inauguration) on a lighter note while absorbing host of negative news and would witness the pre-budget rally once anxiety around trump event settles down.
- In the upcoming eventful week, we expect volatility to remain elevated wherein we expect Nifty 50 to eventually regain upward momentum and gradually head towards 24,200 in coming month as it is 61.8% retracement of Dec-Jan decline (24,857-23,047). However, the move towards 24,200 would be in a non-linear manner as volatility would remain elevated amid Q3FY25 earning season. In the process, key support threshold is placed at 22,500. Our constructive view is based on following observations:
a. past four months 12% correction has hauled Nifty to 52 weeks EMA amid oversold conditions (weekly and monthly stochastic oscillator placed at 16 and 15, respectively), indicating impending pullback.
b. Improving global sentiment on the back of lower-than-expected US inflation data boosted market sentiment.
c. During past four months corrective phase index has discounted host of negatives like geopolitical worries, continues FII’s sell-off, depreciating rupee, muted earning season.
d. The US Dollar index has retreated after approaching key hurdle of 110-112 levels amid overbought conditions. We expect, dollar index to cool off post anxiety around Trumps new policies settles down that would bring on risk on sentiment.
e. The market breadth has seen improvement as currently 20% stocks of Nifty 500 universe are trading above their 50 days SMA compared to November reading of 8%. Meanwhile, another breadth indicator (Net of Advance-Decline) has bounced after approaching bearish extremes of 480. Historically, such a bearish extreme reading resulted into pullback in subsequent weeks.
4. On the downside, critical support is placed at 22,500 which aligns with the implied target of the recent consolidation breakdown (24,200–23,300) and coincides with the 50% retracement of the October 2023 to September 2024 rally (18,838–26,277).
5. Sectorally, we remain constructive on BFSI, IT, Oil & Gas, Capital Good & Infra while Metals and PSE offers favourable risk reward set up.
Stocks To Buy This Week – Dharmesh Shah
1. Buy Hindustan Aeronautics Ltd (HAL) in the range of ₹4,080-4,160 for the target of ₹4,685 with a stop loss of ₹3,665.
2. Buy Titan in the range of ₹3,320-3,380 for the target of ₹3,830 with a stop loss of ₹3,220.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
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