Top Stock Recommendations: Dharmesh Shah of ICICI Securities suggests buying RIL, and LIC today
- Top Stock Recommendations: Dharmesh Shah of ICICI Securities has recommended two stocks to buy this week - Reliance Industries Ltd (RIL), and Life Insurance Corporation (LIC).
Stock Market News: Despite a flat and slow start, the domestic benchmark equity indices Sensex and Nifty 50 finished Friday's session in the green.
On Friday, Nifty 50 stood tall, notching another historic new record all-time high at 23,490.40. The Bank Nifty ended above the 50,000 mark. The 30-share BSE Sensex ended higher by 181.87 points or 0.24% at 76,992.77 level while the Nifty 50 closed at 23,465.60 level, up 66.70 points or 0.29%.
According to experts, mainstream India is expected to pay greater attention to financial markets, as the Nifty 50 surged on positive expectations following a BJP-led victory in the Lok Sabha elections, lower inflation data, and a robust economic forecast.
“In our opinion, the most striking positive development for Nifty 50 and our stock markets was that the gains came despite US Federal Reserve intending to cut rates only once by 25 basis points this year instead of the two that the consensus had. India VIX drops 4.97% to 12.82,” said Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities.
The stock market was closed for trade on Monday, June 17 due to Bakri Eid. Trading is scheduled to resume today.
Market Outlook by Dharmesh Shah, Vice President, ICICI Securities
The index started the week on a positive note and consolidated near life highs. The weekly price action formed a bull candle carrying higher high-low, indicating continuance of positive momentum. Boarder market relatively outperformed and endured its record setting spree.
In the upcoming truncated week, we expect Nifty 50 to sustain above the key hurdle 23,400 and eventually head towards 23,800 in coming weeks. In the process, temporary breather after 10% rally (from June low) cannot be ruled out. However, such breather should not be construed as negative instead capitalised it as incremental buying opportunity as strong support is placed at 22,800. In the process, stock specific themes are expected to outperform. With market now focusing on government’s 100-day agenda and budgetary allocations, we expect outperformance in BFSI, PSU, Capital Goods & Infra, Defense, Power, auto.
Our positive bias is further validated by following observations:
a. Market breadth has shown renewed optimism as stocks above 50-day ema has improvised from 51% just before elections to 88% this week.
b. The market fear gauge India VIX has plunged 24% this week (60% from last week’s high) as anxiety around the election event settles down.
c. Buoyancy in US markets bodes well for domestic market as it has direct correlation with the developed market.
Structurally, the formation of higher peak and trough signifies elevated buying demand that makes us revise support base at 22,800 as it is 20 days EMA.
On the Bank Nifty front, we expect index to gradually head back to its life highs of 51,133 in coming weeks in non-linear fashion. In the process, immediate support will be placed at 48,500 levels for coming weeks.
Top Stock Recommendations:
1. Buy Reliance Industries Ltd (RIL) in the range of ₹2,920-2,958 for the target of ₹3,270 with a stop loss of ₹2,730.
2. Buy Life Insurance Corporation (LIC) in the range of ₹1,045-1,065 for the target of ₹1,175 with a stop loss of ₹974.
Disclaimer: 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.
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