Top Stock Recommendations: Dharmesh Shah of ICICI Securities suggests JSW Energy, and Canara Bank today

Stock Market News: On Monday's early trade, the Adani group's stocks plummeted draggingthe domestic benchmark indices, the Nifty 50 and Sensex. This resulted from claims made by US short-seller Hindenburg Research that the head of the country's markets regulator had shares in offshore funds that the Adani consortium used.

The head of the Securities and Exchange Board of India, Madhabi Puri Buch, was accused over the weekend by US-based Hindenburg of having previously invested in offshore funds that were also utilised by the Adani Group. Buch refuted the claims, asserting that all investments had been properly declared. The markets watchdog requested that investors maintain composure and do their research before responding to the story in a subsequent statement.

At 9:52 IST, the Nifty 50 index was down 0.5% at 24,245.85, while the Sensex was down 0.52% at 79,290.26.

Geojit Financial Services' Chief Investment Strategist, Dr. V K Vijayakumar, said this week's market movement will probably be influenced by both domestic and international factors. Stock markets across the world will be closely observing US consumer statistics and core CPI figures, which will reveal the health of the US economy. The yen's stability suggests that the anxieties related to the yen carry trade have subsided.

As a result, the expected Fed rate decrease and the projected developments in the US macros are likely to have a considerably greater impact on markets than any other variables. On the domestic front, there's the Hindenburg report and its potential consequences. It is doubtful that this "revelation" will have a significant effect on the market.

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

The index witnessed a gap down opening (24,717-24,302) and gradually consolidated in a narrow range of 24,400-23,900 throughout the week. The weekly price action resulted into doji like candle, indicating elevated volatility wherein supportive efforts that emerged from 50 days EMA

In the upcoming truncated week, we expect Nifty 50 to consolidate in 24,400-23,800 range as markets would look for direction from global markets coupled with India and US inflation data. Further, follow through above Doji high of 24,400 would lead to extended pullback towards 24,700 in coming weeks. Traders should note that, intermediate correction is a part of structural up move which offers incremental buying opportunity. Following are the key monitorable for upcoming week:

A) Structurally, key point to highlight is that since Oct-2023 Nifty 50 has not corrected for more than 2 weeks wherein intermediate correction have been limited to 5%. In the current scenario as well, we expect index to maintain same rhythm and stage a pullback as Nifty 50 has already corrected 5% over past 2 weeks.

B) India VIX is key monitorable from risk perspective. VIX has cooled down significantly from resistance zone of 23 indicating that participants are not expecting higher risk in short term.

C) Globally, Nikkei and US indices have also bounced from oversold readings and expected to consolidate.

The formation of lower high-low on the weekly chart makes us revise support at 23,800 as it is confluence of 20 days EMA coincided with last week’s low.

The Bank Nifty witnessed supportive efforts from 100 days EMA and formed a doji like candle on the weekly chart, highlighting elevated volatility. Going ahead, follow through strength above last week’s high (50,750) would lead to extended pullback in coming week towards 51,300. Meanwhile, medium term support for index is placed at 49,600 which is confluence of a) 50% retracement of post election rally and b) value of rising 100-day ema.

Top Stock Recommendations

Buy JSW Energy in the range of ₹690-712 for the target of ₹798 with a stop loss of ₹648.

Buy Canara Bank in the range of ₹109-111 for the target of ₹120 with a stop loss of ₹105.

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 16/08/2024 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.