Stocks to buy or sell: Dharmesh Shah of ICICI Securities suggests buying Kotak Bank, JK Lakshmi Cement today - 10 Feb
- Stocks to buy or sell: Dharmesh Shah of ICICI Securities recommends buying Kotak Mahindra Bank, and JK Lakshmi Cement this week.
Stock Market News: The domestic benchmark indices, Nifty 50 and Sensex, opened with a slight decline on Monday, reflecting a balance between the recent rate cut by the Reserve Bank of India and fresh concerns over Donald Trump's potential tariffs on aluminum and steel imports.
The Nifty 50 started at 23,543.80 points, down 16.15 points or 0.07%, while the Sensex opened at 77,789.30, sliding 70.89 points or 0.09%.
Market analysts noted that while the initial response to the RBI's rate cut had settled, the renewed threat from Trump regarding tariffs on essential metals has created unease, raising concerns about the implications for global trade and market stability.
Nifty 50 and Sensex, finished in the negative on Friday after the Reserve Bank of India (RBI) declared a 25 basis points (bps) reduction in the repo rate, lowering it to 6.25 percent. This was the first rate cut in more than five years, indicating a move to stimulate economic growth amidst global uncertainties.
The Sensex dropped by 197.97 points, closing at 77,860.19, while the Nifty 50 fell by 43.40 points, wrapping up the day at 23,559.95. Among the Nifty 50 stocks, 28 rose in value while 23 saw declines.
Vinod Nair, who is the Head of Research at Geojit Financial Services, remarked that the rate cut intended to stimulate the faltering economy is a sign of positivity. Nonetheless, yields rose slightly as investors reacted negatively to the lack of expected liquidity measures, which led to profit-taking in the indices.
Moreover, a downward adjustment in the short-term growth outlook, affected by global trade issues and inflation worries, indicates that the central bank will likely pursue a careful and gradual strategy for future rate changes.
Experts believe that the coming week will be quite eventful for both global and Indian markets, influenced by significant macroeconomic data releases and corporate earnings reports. Market sentiment will be impacted by inflation statistics, industrial production data, and major earnings announcements.
Market Outlook by Dharmesh Shah, Vice President, ICICI Securities
- Equity benchmark extended gains over second consecutive week tracking firm global cues amid temporary pause on Tariff by Trump Government and RBI policy outcome. Nifty 50 gained 0.3% to settle at 23,560. Sectorally, Metal, Pharma, Private Banks outshone while FMCG, Realty took a breather. The weekly price action, resulted into a bull candle carrying higher high-low, indicating continuation of positive bias.
- The index is taking breather after witnessing breakout from three week’s base formation. We believe, ongoing breather would make market healthy and gradually pave the way to head towards 24,000 in coming weeks. In the process, bouts of volatility cannot be ruled out amid state election outcome and inflation print on domestic as well as US front. Meanwhile, Prime Minister Modi's visit to US would be key monitorable. Hence, accumulating quality stocks on dip would be the prudent strategy to adopt as immediate support is placed at 23,200.
- Key point to highlight is that, mirroring the benchmark move, supportive efforts emerged in Bank Nifty from lower band of two years rising channel and ratio chart of Bank Nifty /Nifty 50 is bouncing from long term cycle lows, indicating relative outperformance going ahead.
- Historically we have observed that, within a structural bull market, secondary correction is a common phenomenon. With current 13% correction in place, the index has approached price and time wise correction. Structurally, since 2002, bull market average corrections have been to the tune of 14% while time wise index has not recorded negative monthly close for more than 3-4 months. Over past four months index has corrected 13% while absorbing the pessimism around the global as well as domestic uncertainties, leading to bearish extreme reading on the sentiment as well as momentum indicators, suggesting impending pullback.
- Meanwhile, the formation of higher high after six weeks corrective phase and close above budget sessions high, indicating shift in momentum that makes us revise support base at 23,200 as it is confluence of 61.80% retracement of recent up move (22,786-23,762) coincided with current week’s low of 23,222.
- On the broader market front, Nifty Midcap and Small Cap are poised at long term four years rising trend line. The sustainability above last week’s hammer like candle would lead to revival in upward momentum in the broader market. Meanwhile, the % of stocks above 50 days EMA have seen decent improvement as it has bounced to 25 levels compared to January reading of 10. Meanwhile, monthly stochastic oscillator is poised at lowest levels since 2008, at 20, indicating impending pullback.
- Amidst Tariff related anxiety, US Dollar index made a failed attempt to surpass 110 mark and currently trading below 108 levels. Meanwhile, Brent crude extended losses over third week in a row and hovering around 75 marks. Falling US dollar index and Brent crude augurs well for risk on sentiment in emerging markets.
- On the sectoral front, BFSI, Auto, Consumption, Hospitality would be in focus.
Stock To Buy This Week - Dharmesh Shah
Dharmesh Shah of ICICI Securities recommends buying Kotak Mahindra Bank, and JK Lakshmi Cement this week.
1. Buy Kotak Mahindra Bank in the range of ₹1,890-1,955 for the target of ₹2,120 with a stop loss of ₹1,789.
2. Buy JK Lakshmi Cement in the range of ₹820-875 for the target of ₹994 with a stop loss of ₹754.
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 07/02/2025 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.
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