Buy or Sell: Dharmesh Shah of ICICI Securities recommends buying Bank of Baroda and Ambuja Cements stocks on Monday

Stock Market News: Domestic equity benchmark indices, the Sensex and Nifty 50, lost direction during Monday's trading session amid mixed global cues. Gains were pared after the benchmark Nifty 50 reached a new high at the opening, pulled down by a decline in metals due to worries over valuation.

On Monday, BSE Sensex opened higher by 96.94 points or 0.13% at 73,903.09 level while the Nifty 50 opened at 22,403.50 level, up 25.10 points or 0.11%.

The Sensex and Nifty 50, ended Saturday's special trading session on a bullish note. During the special live trading session on Saturday, the domestic  benchmark indices mirrored the favourable overnight cues from Wall Street, as the Nifty 50 reached a new all-time high of 22,419.55. The Sensex reached an all-time closing high of 73,860.26 after rising 114.91 points, or 0.16%

The 30-share BSE Sensex ended flat by 60.80 points at 73,806.15 level while the Nifty 50 closed at 22,378.40 level, up 39.65 points or 0.18%.

Also Read: Stock market today: Sensex ends flat, Nifty 50 closes up by 39.65 points in second part of special trading session

Net-net, the Nifty 50 was able to close this extended trading week at the 22378 level, up 0.74%. India's GDP growth of a solid 8.4%, the Fed's favoured PCE inflation measure matching consensus expectation, and the global stock markets, particularly the Japanese Nikkei and Wall Street, recording their fresh record highs, were the main positive catalysts that kept working in the background, according to analysts.

Also Read: Over 40 smallcap stocks gain between 10-40% as Sensex logs third straight weekly gain; RailTel among gainers

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Amongst sectoral indices on Saturday, the Nifty Media Index gained 1.75%, making it the top sector among sectoral indexes, while the Nifty Metal index continued to shine even brighter, up 1.58%.

NSE and BSE on Saturday conducted a special live trading session to assess the resilience of their disaster recovery systems. Special trading session is part of the framework for the Business Continuity Plan (BCP) and Disaster Recovery Site (DRS) management system.

Also Read: Indian stock market special live trading session today: Check out timing, purpose, other important details

Market Outlook

In line with our expectations, the Nifty 50 managed to hold the 21,800 mark despite elevated volatility and recorded a fresh all-time high of 22,353 as strong GDP numbers boosted market sentiment. The index has retraced the past five sessions decline in just a single session, highlighting a faster retracement that makes us reiterate our positive stance and expect Nifty 50 to head towards 22,700 in the coming week’s. In the process, we expect large caps to relatively outperform the broader market, as the ratio of Nifty 50 vs Nifty 500 has bottomed out around 1 level. Meanwhile, 21,800 would act as immediate support in the upcoming truncated week, said Dharmesh Shah, Vice President, ICICI Securities.

Also Read: Week Ahead: Macro data, FII activity, global cues among key market triggers as Nifty 50 eyes 22,600 this week

Empirically, in the general election year, Nifty 50 has a tendency to bottom out in February–March, followed by a minimum 14% rally (from the bottom towards) general election outcome in each of seven instances over the past three decades. Thereby, we expect Nifty 50 to maintain the same rhythm and head towards 23,400 by June 2024. Hence, bouts of volatility ahead of the general election should be capitalised as buying opportunity from a medium-term perspective, explained Shah.

Mirroring the index move Bank Nifty (which carries 33% in Nifty 50) has witnessed a faster pace of retracement as it retraced six sessions of decline in just a single session, highlighting a robust price structure. We expect, Bank Nifty to endure its upward momentum and gradually head towards a life high of 48,600 while strong support is placed at 46,200, said Dharmesh.

Also Read: Dividend Stocks: Marico, Sanofi India, among others to trade ex-dividend next week; check full list

Stock Recommendations by Dharmesh Shah

On stocks to buy on Monday, Dharmesh Shah recommended two stocks:

Buy Bank of Baroda in the range of ₹266-273 for the target of ₹305 with a stop loss of ₹252.

Buy Ambuja Cements Ltd in the range of ₹605–618 for the target of ₹658 with a stop loss of ₹581. 

Also Read: Stock market today: Sensex ends over 1,000 points higher, Nifty 50 settles above 22,300-mark led by metal, bank stocks

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 02/03/2024 (preceding date) or have no other financial interest and do not have any material conflict of interest.

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