Stocks to buy or sell: Dharmesh Shah of ICICI Securities recommends buying JSW Steel, NTPC tomorrow

Stock Market News: Local benchmark indices Nifty 50 and Sensex surged during the special one-hour muhurat trading session held on Friday, November 1, celebrating the Diwali festival. The main reason for this rise was automobile stocks following encouraging monthly sales figures.

While Nifty 50 rose 0.41% to 24,304.35 points, Sensex rose 0.42% to 79,724.12 points and broke its two-day losing streak. US stocks also rose as October nonfarm payrolls data raised expectations for additional interest rate cuts in the world’s largest economy.

Since last Diwali, Nifty 50 has gained around 25% as of last close, on the back of consistent policies, stable macroeconomic environment, positive corporate growth outlook and increasing participation of retail investors. The broader market also rose, outpacing the benchmark’s gains, thanks to strong inflows into the country’s investment funds and buying from small investors.

As Palka Arora Chopra, Director, Master Capital Services, noted, the market outlook will be influenced by key macroeconomic data such as the US Presidential Election results to be announced on November 5, as well as the HSBC India Manufacturing PMI (October). ), HSBC India Services PMI (October), US Federal Reserve’s interest rate decision, US S&P Global Composite PMI (October), US S&P Global Services PMI (October) and Bank of England’s interest rate decision (November).

Market Outlook Written by Dharmesh Shah, Vice President ICICI Securities

The equity gauge witnessed lackluster action ahead of the US elections and ended the short-lived week on a flat note at 24,304; here Nifty 50 oscillated in the range of 360 points. As a result, the weekly price action has formed a doji-like candle trapped inside last week’s large bearish candle, indicating that the downside momentum has paused.

We expect volatility to remain high in the upcoming busy week ahead of the US elections and Fed results. However, monitoring the maturity of price-based correction amid oversold conditions and continued outperformance of Bank Nifty leads us to believe that downside moves will be limited as Nifty 50 finds feet around the 23,700-23,500 zone.

Therefore, from a medium-term perspective, gradual accumulation of quality stocks would be a prudent strategy to follow. On the upside, a clear close above the upper band of the recent consolidation (24,500-24,075) would result in a prolonged pullback towards the 24,900 level. In this process, stock-specific actions will continue as the earnings season progresses. Our view of buying on dips is further confirmed by the following observations:

A) Average interim corrections since the Covid lows have been around 8-10%. The current 8% retracement indicates a limited downside move indicates an impending pullback.

B) In the current consolidation phase, Bank Nifty was an outlier. The rate chart of Bank Nifty/Nifty 50 shows a clear post-bottom performance at long-term cycle lows which will give impetus to long-term pullback in Nifty 50 as Bank Nifty carries weightage in Nifty 50 (32%).

C) The oversold condition of the weekly stochastic oscillator (located at 10) and the bearish over-reading of the market breadth indicator warrant a pullback in the headline indices as the EMA recovers from the 12% downtrend of shares over 50 days.

Structurally, we believe strong support for Nifty lies in the 23,700-23,500 zone as this zone is a combination of:

A) 50% retracement of the June-September rally (21,281-26,277) placed at 23,800.

B) As a result of the election, price parity will decrease by 9% from September’s highest level of 26.277.

C) The 200-day EMA is placed at 23,500.

Sectorally, Shah said that while he expects BFSI and pharma to continue its superior performance, capital goods and infrastructure stocks offer a positive risk-reward pattern.

Stocks to Buy This Week – Dharmesh Shah

1. Buy JSW Steel in the range ₹For Target 940-968 ₹1.075 with stop loss ₹898.

2. Buy NTPC in the range ₹402-412 for target ₹with 485 stop-loss ₹394.

Disclaimer: Neither the Research Analyst nor its relatives or I-Sec has any actual/beneficial interest or any other financial interest or any other interest in 1% or more of the securities of the subject company as of the end of 01/11/2024. financial conflict of interest.

The opinions and recommendations presented in this analysis are those of the individual analysts or brokerage firms and not of Mint. Because market conditions can change rapidly and individual circumstances may vary, we strongly recommend that investors consult certified professionals before making any investment decisions.