Buy or sell: Dharmesh Shah of ICICI Securities recommends these two stocks to buy this week

Stock Market News: US markets rose over the weekend on growing optimism over artificial intelligence (AI). On the other hand, given the long weekend holidays, low trading activity, and weekly option expiry, domestic markets on Saturday showed a muted trend. Information technology (IT) and fast-moving consumer goods (FMCG) saw profit booking, while private banks saw selective purchasing following a recent strong fall and steady Q3 earnings.

On Saturday, the S&P BSE Sensex fell 0.4% or 259.58 points to 71,423.65, while the Nifty 50 closed 0.23% or 50.60 points lower to 21,571.80.

The equity market will remain closed today on account of a public holiday in the country celebrating the inauguration of the Ram Temple in the northern city of Ayodhya. We only have three trading sessions this week. The equities market will be closed on Friday, January 26, in honour of the 75th Republic Day.

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Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, is certain that Ayodhya would grow significantly as a spiritual tourism destination given the attention and excitement surrounding the Ram temple in Ayodhya. Travel, hotel, and other tourism-related businesses have drawn investors due to the industry's immense potential. Investors should see the long-term potential of investments, but they shouldn't go after these expensive equities excessively.

"Many stocks in this segment have run up too much too fast and have shot up by more than 100% in just few weeks. This is a sentiment-driven rally triggered by retail exuberance. Broadly, the valuation of the mid and small cap segments are too high, unjustified, almost in frothy territory. This mid and small cap frenzy is partly driven by the newbie retail investors who are chasing these stocks and partly by mid and small cap mutual funds to which inflows are strong and sustaining.

Ayodhya tourism has excellent long-term prospects, investors have to be careful about the valuations. Large caps in IT, capital goods, telecom and selective private sector banks are safer bets now," said Vijayakumar.

Also Read: Buy or sell: Ruchit Jain recommends these two stocks to buy next week

Going ahead, this week's Q3 earnings season will continue to be the focus as a number of significant companies, including United Spirits, Bajaj Auto, Canara Bank, Ceat, IOC, Tata Steel, TechM, ACC, HPCL, JSW Steel, and Havells, Axis Bank, and L&T Finance, will release their quarterly results.

Analysts predict that the Bank of Japan (BoJ) and European Central Bank (ECB) interest rate decisions, in addition to US GDP statistics, will influence market dynamics on a macro level.

Also Read: Q3 results this week: L&T Finance, Pidilite Ind, Adani Power, IIFL Securities, Zensar Technologies, Axis Bank and more

Share Market Tips For This Week

Nifty 50's weekly price action resulted in a bear candle, indicating a breather near life highs led by profit booking in heavyweight private banks. In the upcoming truncated expiry week, we expect a prolongation of consolidation with a stock-specific action that would help the index form a higher base after the 17% rally seen over the past two months. Thus, buying dips would be the prudent strategy to adopt, as we expect last week’s panic low of 21,300 to be held and the index to pose a bounce back towards the 22,000 mark in the run-up to the budget, advised Dharmesh Shah, Assistant Vice President (AVP), ICICI Securities.

The Bank Nifty corrected 3%, indicating a pause in upward momentum. In the upcoming expiry week, we expect volatility to remain high. Thus, holding last week’s low of 45,400 would keep pullback options open towards 46,800, with public sector undertakings (PSU) banks expected to outperform, said Shah.

Also Read: Stocks to Buy: RITES and Oil India among top choices, here's why

Stocks To Buy This Week - Dharmesh Shah

On stocks to buy this week, Dharmesh Shah recommended two stocks: GAIL and Bank of Baroda.

Here we list out details in regard to Dharmesh Shah's stock recommendations:

1. Buy GAIL (India) Ltd in the range of ₹164–167 for the target of ₹184 with a stop loss of ₹156.

2. Buy Bank of Baroda in the range of ₹230–235 for the target of ₹252 with a stop loss of ₹222.

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.