Stocks to buy or sell: Dharmesh Shah of ICICI Sec suggests buying Tata Steel shares on April 6

Stock market news: The domestic equity markets were closed on Friday, April 3, due to Good Friday.

On Thursday, April 2, the main indices, Nifty 50 and Sensex, bounced back from earlier losses as the rupee strengthened following actions taken by the central bank, although diminishing expectations for a quick resolution to the situation in Iran extended the decline to six consecutive weeks.

The Nifty 50 closed 0.15% higher at 22,713.1, while the Sensex increased by 0.25% to 73,319.55 after witnessing a drop of over 2% earlier in the day.

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

Heightened global volatility continued to weigh on equity markets, leading to another week of lackluster performance that pulled the Nifty 50 down, 0.5% to settle the week at 22,713. The broader market mirrored this trend, declining in tandem with the benchmark. While the benchmark struggled, selective buying emerged in IT, Metals, and Defense, each advancing by more than 2%. In contrast, Pharma and Financial stocks faced profit booking.

Technical Outlook

1. Seven consecutive weeks of lower high-low formations indicate a sustained corrective phase, with brief rallies failing to hold. Notably, Thursday saw a potential exhaustion gap as prices hit a two-year rising trend line and staged a sharp ~600 points recovery to fill the opening gap. This price action suggests that selling pressure is tapering off.
2. For a trend reversal to gain confidence, the index must sustain above the short-term average placed at 23,500 and close above the previous week's high, which has been missing over last six weeks.
3. In current scenario, Nifty 50 has already corrected ~16% from life time highs that hauled most of the momentum, sentiment as well as breadth indicators in bearish extreme readings. Looking at the historical evidences we believe, current decline should find its feet around 21,900-21,700 zone which would provide base for a durable bottom. Historically, these oversold conditions have offered good entry opportunity for constructing medium-to-long-term portfolios.

Our constructive bias is based on following observations:

1. Historically, since 1996, there have been only 4 occasions where index has given a monthly negative close for more than 4 months in a row, post which index has staged a strong recovery in subsequent quarters. Currently, index corrected over 4 consecutive months.

2. Such intermediate correction got arrested in the vicinity of long term 200 weeks EMA (barring 2001,2008, 2020), currently placed at 21,930.

3. Over past 25 years, there have been 8 occasions where bull market correction got arrested within 15-20% range with an average correction of 17%.

4. With the 16% decline (off Feb high of 26,341), Nifty 50 has hauled monthly stochastic oscillator in oversold territory (placed at 12). Further, the divergence on the daily chart (where price is making lower low while RSI is making corresponding higher lows) along with oversold placement of weekly and monthly stochastic oscillator signifies, waning of downward momentum.

5. On the Bank Nifty front, since Covid there have been six major correction which anchored around 20-22%. With 19% correction already in place amid oversold conditions, indicating that the downside approaching maturity, in line with historical corrective cycles.

6. In case of geopolitical events, past four decades data suggest that price wise median correction matures around 11%. Buying during such a panic scenario has garnered >25% returns in next 6 months.

7. Historically, durable bottoms are formed when the market breadth indicator approaches its bearish extremes. The current reading of % of stocks above 50 and 200 SMA (Nifty 500 universe) rhymes with the historical readings where index formed a durable bottom. Last week, only 15% of stocks were above their 50- and 200-days SMA and Net of daily advance-decline was at 440, signaling capitulated extremes. Post these extremes, the index has delivered a median rally of ~23% in the subsequent 6-12 months period.

Key Monitorable:

1. De-escalation of geopolitical tension

2. Cool-off in crude oil

3. RBI Policy

4. Start of Q4-FY26 earnings

5. US Inflation

Stocks To Buy This Week - Dharmesh Shah

Dharmesh Shah of ICICI Securities recommends buying Tata Steel Ltd.

Buy Tata Steel in the range of ₹189-195. He said Tata Steel share price target of ₹216 with a stop loss of ₹179.

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 03/04/2026 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.