Stocks to buy or sell: Dharmesh Shah of ICICI Securities suggests buying Kotak Mahindra Bank tomorrow – 3 March 2025 | Stock Market News

Stock Market news: Broad-based selling on February 28 led to Nifty 50 and Sensex recording their worst intraday performance of the calendar year so far.

The Nifty 50 closed the session with a 1.85% decline at 22,128 points, marking its steepest single-day drop of 2025. Similarly, the Sensex saw its sharpest intraday decline of the year, falling 1.90% to 73,198 points. Both indices ended February with an almost 6% loss, extending their losing streak to five consecutive months.

In February, the Nifty declined by 1,383.7 points (5.88%), while the Sensex fell by 4,302.47 points (5.55%).

The BSE benchmark, which reached an all-time high of 85,978.25 on September 27 last year, has since dropped 12,780.15 points, marking a 14.86% decline. Meanwhile, the Nifty has plunged 4,152.65 points (15.80%) from its record high of 26,277.35 on September 27, 2024. Additionally, the Nifty IT index touched a six-month low.

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

1. Equity Benchmark continued with its losing streak over third consecutive week tracking global volatility amid tariff related ambiguity. Nifty lost 3% to settle at 22125. Broader market bore the brunt of sell-off resulting into decline of >5%.

2. In the process, IT index plunged 8% for the week. The index has accelerated downward momentum on the breach of immediate support of 22800. As a result, weekly price action resulted into sizable bear candle, indicating corrective bias.

3. The lack of follow through strength above previous weeks high signifies continuation of corrective bias. However, investors should note that, with past 5 months 16% correction, the momentum as well as sentiment indicators are approaching oversold condition. Hence, traders to refrain from creating aggressive short position as possibility of technical bounce cannot be ruled out from key support zone of 21800-21500. However, to pause the downward momentum, index need to witness a sharp reversal and decisively close above earlier support of 22800 which would act as key resistance as per change of polarity concept. Eventually, we expect the index to undergo base formation over next couple of weeks based on following observations:

A) The monthly stochastic oscillator is trading at the extreme oversold territory of 11 (lowest since 2002) while daily RSI has dipped below 25 mark for the first time since 2020, indicating impending pullback.

B) The market breadth has approached the bearish extreme as % of stocks (within Nifty 500 universe) above 50 and 200 days SMA has approached their bearish extreme of 9 and 8 respectively in current corrective phase. Historically, such bearish readings have paved the way for durable bottom in subsequent weeks.

C) The US 10-year bond yields is at 4.25, down 7% at for the month and now appears to be forming bearish evening star candlestick pattern on the monthly chart, indicating corrective bias.

D) The US Dollar index has been trading in the vicinity of 107 marks for the second consecutive month. Further weakness would be beneficial for emerging markets.

E) Brent crude has snapped two months up move and sustaining well below $73 mark, which augurs well for the Indian economy and equity markets.

F) Further development on ease off in geopolitical worries would bring some stability in equity markets.

4. On the broader market front is that, past two decades data suggest, in a bull market phase, Nifty midcap and small cap have a seen average correction of 27% and 29%, respectively. In current scenario, we believe both indices are approaching their price wise bull market correction as Nifty midcap and small cap have already corrected 22% and 26%, respectively, indicating limited downside going ahead. Hence, focus should be on accumulating quality stocks (backed by strong earnings) in a staggered manner.

5. The formation of lower high-low signifies corrective bias wherein strong support is placed around 21800-21500 zone as it is confluence of:

a) 61.8% retracement of rally seen during oct-23 to sept-24 (18828-26277).

b) Rising trend line drawn adjoining subsequent major lows off Jun-22 of 15183 is placed at 22000.

Stock To Buy This Week – Dharmesh Shah

Dharmesh Shah of ICICI Securities recommends buying Kotak Mahindra Bank this week.

Buy Kotak Mahindra Bank in the range of ₹1870-1925 for the target of ₹2120 with a stop loss of ₹1789.

Disclaimer: The Research Analyst or his relatives or I-Sec do not have actual/beneficial ownership of 1% or more securities of the subject company, at the end of 21/02/2025 or have no other financial interest and do not have any material conflict of interest.

The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.