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Business News/ Markets / Stock Markets/  Top Stock Recommendations: Dharmesh Shah of ICICI Securities suggests buying SBI, and Power Grid Corp today
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Top Stock Recommendations: Dharmesh Shah of ICICI Securities suggests buying SBI, and Power Grid Corp today

Top Stock Recommendations: Dharmesh Shah of ICICI Securities has recommended two stocks to buy on Monday - State Bank of India (SBI), and Power Grid Corporation of India Ltd.

Top Stock Recommendations: Dharmesh Shah of ICICI Securities recommends buying State Bank of India and Power Grid Corporation of India Ltd this week.Premium
Top Stock Recommendations: Dharmesh Shah of ICICI Securities recommends buying State Bank of India and Power Grid Corporation of India Ltd this week.

Stock Market News: The domestic benchmark indices, the Sensex and Nifty 50, started off Monday's session in green led by Kotak Mahindra Bank, Britannia Industries,and IT stocks.

Nifty 50 kick-started the session above 22,500 and Sensex above 74,200.

Warren Buffett's remark that India is an unexplored market with immense potential is emphasized by Dr. V K Vijayakumar, Chief Investment Strategist of Geojit Financial Services, as being very significant. Rather of responding to every variation in US bond yields, FIIs might learn from that.

Given its stellar Q4 earnings, Kotak Mahindra Bank will likely to get a good reaction. The markets are expected to react favorably to the Q4 auto numbers, which are expected this week.

Also Read: Nifty 50, Sensex today: What to expect from Indian stock market in trade on May 6

The Sensex and Nifty 50 plunged dramatically down on Friday, May 3, as profit taking across sectors prevented them from holding the gains seen in early trade.

On Friday, the 30-share BSE Sensex closed at 73,878.15 level, down 732.96 points, or 0.98%. The NSE Nifty 50 ended at 22,475.85, down 172.35 points, or 0.76%.

Analysts said that sentiment, fundamentals, and overbought technical situations were in conflict. Excessive optimism, overbought technical conditions, and the revelation that FIIs were net sellers of 2,116 crores last week were the three negative catalysts that gave rise to the bears' emergence in Friday's trade amid massive profit booking.

Also Read: Stock market news: Sensex crashes 1%; India VIX jumps 9%; why did Indian stock market fall today?- explained

Nifty 50 bulls could stay strong against a background of six favourable triggers, according to Prashanth Tapse, Research Analyst and Senior Vice President of Research at Mehta Equities. These include Federal Reserve Chairman Jerome Powell's dovish stance on interest rates. (Powell restored hope that the Fed will be able to lower interest rates this year); In the meantime, the Fed's expectations for a rate cut have been pushed back from November to September due to a weaker-than-expected April jobs report; WTI oil prices have dropped 6.5% to a seven-week low of $78.30 per barrel; and record-high GST revenue.

Gross Goods and Services Tax collections hit a new high of 2.10 lakh crore in April 2024. This indicates a noteworthy annual growth of 12.4%, mostly due to a robust rise in both domestic transactions (up 13.4%) and imports (up 8.3%); Finally, at the pre-election rally, investors expressed hope or expectation that the existing government will continue in the general elections; the India Meteorological Department has forecast the heaviest rainfall in over 20 years.

Also Read: Stock split 2024: Small-cap stock Rushil Decor sets board meeting date to consider stock subdivision

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

• The index recorded a fresh all-time high of 22,794 and underwent profit booking in Friday’s session. The weekly price action formed a bear candle with a long upper shadow, highlighting profit booking near 22,800 amid elevated volatility ahead of the election.

• In the coming week, we expect Nifty 50 to undergo higher base formation above 22,000, which would set the stage to challenge 22,800 and accelerate upward momentum towards our earmarked target of 23,400 by June. In the process, bouts of volatility ahead of the general election phase cannot be ruled out amidst the Q4 earning season. Thus, utilising dips to accumulate quality stocks would be the prudent strategy to adopt. Our constructive bias is validated by the following observations:

• A) Contrary to the adage of sell in May and go away, Indian equities have delivered positive returns in May during general election years in four out of the past five instances since CY1999. Minimum returns were 1.5%, while the average was 14%.

• B) Brent prices have given breakdown from five month rising channel indicating that upsides are capped around $92. Further declines towards 75–78 are likely in the coming month.

• C) The broader market remains strong, led by mid- and small-caps strong performance in April as both indices recorded fresh all-time highs. Large FII selling also being absorbed by DII flows, limiting downsides.

Also Read: FPIs invest 1,156 crore in Indian equities, remain net sellers in debt market; Here's what experts predict

Bank Nifty Outlook:

• The Bank Nifty index has given a breakout from the 3 ½ month consolidation, indicating an acceleration of the up move. On the relative front, Bank Nifty is expected to outperform Nifty 50. We expect the bank Nifty to form a higher base above 48,000 and gradually pave the way to challenge the psychological mark of 50,000. 

Top Stock Recommendations:

Buy State Bank of India (SBI) in the range of 810–832 for the target of 890 with a stop loss of 745.

Buy Power Grid Corporation of India Ltd in the range of 305–313 for the target of 338 with a stop loss of 299.

Also Read: Dividend Stocks: HDFC Bank, RK Forgings, HCL Tech, among others to trade ex-dividend next week; check full list

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 03/05/2024 (preceding date) or have no other financial interest and do not have any material conflict of interest.

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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Published: 05 May 2024, 12:35 PM IST
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