Buy or sell: Sagar Doshi of Nuvama recommends buying HDFC Bank and TCS stock for March 13

Stock Market News: Domestic benchmark equity indices, the Sensex and the Nifty 50, started Wednesday's trading session with modest gains driven by ITC stock, positive global cues, and steady inflation data.

ITC recorded its largest one-day gain since September 2021, up more than 6% amid reports of a block deal in the firm, with British American Tobacco Plc (BAT) most likely acting as the seller of ITC shares.

However,  the broader market continued to decline, as Nifty small cap reached its lowest intraday level since December 2023.

Also Read: ITC share price jumps over 8% as BAT sells 3.5% stake in block deal, posts biggest single-day gain since September 2021

“In the near-term investors should focus on the sustained weakness in the broader market, particularly the Smallcap segment. The excessive valuations in these segments driven by the irrational exuberance of retail investors has been a concern for many months now. But it has taken the strong message from the regulator SEBI to trigger a correction in the Nifty Smallcap index by 10% from the February 8th peak,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

On Wednesday, the 30-share BSE Sensex opened higher by 325.44 points or 0.44% at 73,993.40 level while the Nifty 50 opened at 22,432.20 level, up 96.50 points or 0.43%. 

Also Read: February inflation remains steady at 5.1% but food inflation up

According to data issued by the statistics ministry on Tuesday, inflation in India as indicated by the Consumer Price Index (CPI) dropped by one basis point to 5.09% in February 2024 from 5.1% in January 2024. Based on the Index of Industrial Production (IIP), India's manufacturing production fell to 3.8% in January 2024, as per government data.

Due to increased petrol costs, US inflation increased in February for the second consecutive month. Government statistics issued on Tuesday showed that the core consumer price index (CPI), which does not include food and energy expenditures, increased by 0.4% in January over February, up from 0.3% in January.

Also Read: US inflation rises again in Feb

With the significant profit booking of the Monday's session, Tuesday's trading on the domestic market was rangebound. Nevertheless, experts said that worries of overvalued valuations continued to put pressure on mid- and small-cap companies.

On Tuesday, the 30-share BSE Sensex ended marginally higher by 165.32 points or 0.22% at 73,667.96 level while the Nifty 50 closed flat at 22,335.70 level, up 3.05  points. 

Also Read: Nifty 50, Sensex end flat; mid, smallcaps suffer deep cuts; investors lose ₹4 lakh crore in a day

Nifty 50 Outlook by Sagar Doshi, Senior Vice President- Research, Nuvama Professional Clients Group

The Nifty 50 has closed at record highs on weekly charts for the trucated week passed by, while on daily some pressure on the higher side was seen. Charts suggest that so far the index is above 22,200 the index remains open to scale at fresh all-time high levels for 22,700+. With no major events lined up around the corner, markets are taking its time to digest the ongoing regulatory concerns for the broader markets. And hence, we believe that for the week to come, large-cap and mega-cap stocks are likely to outperform broader markets and micro cap names, said Sagar Doshi, Senior Vice President- Research, Nuvama Professional Clients Group. 

Bank Nifty Outlook

Bank Nifty is on the route to trade with a 1,000-point band of 47,000 to 48,000 for the week to come as it has completed its short-term upside in last week's trade while failing to reclaim its all-time highs; hence, a consolidation for a couple of trading days is on the cards, highlighted Doshi.

Stock Recommendations by Sagar Doshi

On stocks to buy on Wednesday, Sagar Doshi has recommended two stocks:

HDFC Bank (Buy) : LCP : ₹1459.55 ; Stop Loss : ₹1,408.00; Target Price : ₹1,560.00

 According to Sagar, HDFC Bank has shown first signs of revived momentum as the stock has broken above its consolidation zone of 1450 on the higher side. Volumes registered on the swing breakout are above average indicating strong participation.

 Tata Consultancy Services (TCS) (Buy) : LCP : ₹4,192.25; Stop Loss : ₹4,045.00; Target Price : ₹4,485.00

Doshi stated that TCS registered yet another All time high closing for itself. This closing comes as a fresh breakout, marking an end to its consolidation since February’24. Above average volumes on breakout are indicative of strong participation.

Also Read: Indian stock market: 8 key things that changed for market overnight - Gift Nifty, US inflation to oil prices

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.