Stocks to buy or sell: Dharmesh Shah of ICICI Sec suggests buying Larsen & Toubro shares on 22 December 2025

Indian stock market: Equity benchmarks extended their decline for a third straight week, mirroring subdued global cues. The Nifty closed the week at 25,966, slipping 80 points or 0.3%, as a weakening rupee dampened market sentiment.

The broader market fared relatively better, ending largely flat. On the sectoral front, IT, FMCG and PSU banks stayed in focus, while financials paused after recent gains. Technically, the weekly price action formed an inside bar, signalling a deceleration in downward momentum.

On Friday, both indices - Sensex and Nifty - snapped their four-day losing streak, ended the session with solid gains. Sensex surged 448 points, or 0.53%, to end the session at 84,929.36, while the Nifty 50 advanced 151 points, or 0.58%, to close at 25,966.40. Broader markets outperformed the benchmarks, with the BSE Midcap index climbing 1.26% and the Smallcap index gaining 1.25%.

According to Dharmesh Shah, Vice President, ICICI Securities, Friday’s sharp rebound has brought the index closer to the upper band of downward slanting channel. The resolute breakout from the falling channel (at 26050) would confirm resumption of uptrend, paving the way to challenge the All Time High around 26300 and eventually open the door for the next leg of the up move towards 26700 in the coming month.

Market Outlook by Dharmesh Shah

1. Structurally, the index has been undergoing a slower pace of retracement. With the past three weeks' correction, it has retraced merely 61.8% of the preceding three weeks’ rally. Amid this corrective phase index has respected 50 days EMA which has been held over the past two months, underscoring the market’s inherent strength.
2. The Bank Nifty has been trading around its 20-day EMA despite ongoing global volatility. Meanwhile, pullback in IT and Oil & Gas signifies revival in upward momentum. Together, these three sectors account for >55% of Nifty’s weightage.
3. Santa rally on cards: Historical data since 1995 suggest that, on 90% of the occasions, Nifty has delivered positive returns in last 10 days of the year with a median of 2%.
4. USD/INR: Price action since February 2016, has been confined in a rising wedge and has historically exhibited a strong inverse correlation with the Nifty. Historically, there have been five instances where a retreat in USD/INR from the upper band of this wedge, averaging a ~4% decline (with a maximum drawdown of ~7%) over two months, was followed by the Nifty delivering average gains of >10% over the subsequent two months. Last week, USD/INR once again retreated from the upper end of its long-term rising wedge. The setup closely mirrors these past inflection points, suggesting the potential for a similar cyclical rhythm to unfold in the coming weeks.

Key monitorables for the upcoming week:

1. India-US trade deal: The favourable outcome of the US and India trade deal could accelerate the positive momentum in the market and pave the way for return of the FII’s in the Indian markets.
2. US GDP data

3. Brent Crude Oil: Dropped ~2% during the week and surpassed it previous swing low. Further cool off in Brent crude oil bodes well for domestic market.

Stocks To Buy This Week - Dharmesh Shah

Dharmesh Shah of ICICI Securities recommends buying Larsen & Toubro and LTIMindtree.

Larsen & Toubro: Buy at ₹3980-407 | Target price: ₹4520 | Stop Loss: ₹3798.

LTIMindtree: Buy at ₹6020-6200 | Target price: ₹6700 | Stop Loss: ₹5848.

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 5/11/2025 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.