Buy or sell: Dharmesh Shah of ICICI Securities recommends these two stocks to buy this week

Stock Market News: After an extended weekend, this week will see a number of noteworthy events for the domestic equities market, with the budget taking centre stage. Experts note that the finance minister's hint of a low-key, vote-on-account budget, however, points to a lack of big decisions. The US Federal Reserve's policies, budget, and earnings will all keep investors and market participants on high alert.

According to Santosh Meena, Head of Research at Swastika Investmart Ltd, given their significant net sales in the Indian equities market this month over ₹35,000 crore, foreign institutional investor (FIIs) activity continues to be a focus point. Global variables, such as changes in US bond yields, the dollar index, and crude oil prices, as well as geopolitical happenings, will also have an impact on the market in addition to domestic ones.

Also Read: Week Ahead: Interim Budget 2024, US Fed Policy, Q3 results, auto sales among key market triggers this week

Nifty 50 and Sensex saw a spike in trading and volatility during the previous truncated trading week, which resulted in a second straight week of losses mostly due to weakness in the banking sector. While other sectors showed resilience, profit booking impacted a number of midcap and smallcap stocks. 

The Nifty 50 ended 101 points, or 0.47%, lower at 21,352.60, and the Sensex ended 360 points, or 0.51%, lower at 70,319.04.

Also Read: Stock market today: Nifty 50, Sensex end with losses; banking, IT stocks among top drags; smallcaps buck the trend

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"The benchmark indices closed on a negative note taking cues from the global market as the positive upside coming from the US economy delayed the optimism of a rate cut. FIIs are in a selling mode as the yields on US benchmark bonds rise. The broader market is unable to hold gains as the concerns of high valuations, subpar results, and persisting geopolitical tension in the Middle East, followed by an F&O expiry, are weighing down the market," said Vinod Nair, Head of Research, Geojit Financial Services.

Wall Street closed mixed on Friday, where the S&P 500's record run came to an end as a result of inconsistent corporate earnings and mild inflation statistics.

The Dow Jones Industrial Average barely missed setting a new high, rising 0.2% to 38,109.43. However, the Nasdaq Composite Index fell 0.4% to 15,455.36, while the S&P 500 fell 0.1% to 4,890.97, ending a four-day record.

Also Read: Wall Street week ahead: Investors’ major focus on Fed rate decision, big tech earnings

Share Market Tips For This Week

The weekly price action resulted in a bear candle carrying a lower high-low, indicating the prolongation of corrective bias. In the upcoming eventful week, we expect volatility to remain high owing to the Union Budget, US Fed meeting, and earnings progression. We expect the index to consolidate in the broader range of 22,000-20,800 amid a positive bias with stock-specific action. The key point to highlight is that, with the past two week’s 4.5% correction, the index is entering budget week on a lighter note as supportive efforts seen from the lower band of consolidation coincided with the 50-day EMA. Thus, accumulating quality stocks on dips would be a fruitful strategy to adopt, advised Dharmesh Shah, Assistant Vice President (AVP), ICICI Securities.

Bank Nifty has approached the key support threshold of 200 days EMA amid oversold conditions, indicating an impending pullback that would fuel the pullback rally in the Nifty 50 (as Bank Nifty carries 35% weightage in the Nifty 50). Thus, we expect bank Nifty to hold 44,000 and stage a pullback towards 46,400 in the coming weeks.

Stock Recommendations by Dharmesh Shah

On stocks to buy this week, Dharmesh Shah recommended two stocks:

Buy Reliance Industries Ltd (RIL) in the range of ₹2,680-2,715 for the target of ₹2,850 with a stop loss of ₹2,638.

Buy Steel Authority of India Ltd (SAIL) in the range of ₹114-117.50 for the target of ₹132 with a stop loss of ₹107. 

Also Read: Market cap of 7 out of top 10 most valued firms decline by ₹1.16 lakh crore; HDFC Bank biggest laggard

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 25/01/2024 (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 broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.