Stocks to buy or sell: Dharmesh Shah of ICICI Securities suggests buying Bajaj Finance today - 03 Feb 2025

Stock Market News: The domestic benchmark indices, Sensex and Nifty 50, opened lower on Monday due to US President Donald Trump's tariffs on China, Canada, and Mexico. The Nifty 50 index fell by 0.9% to 23,271.35, while the Sensex dropped 600 points in the opening session to 76,910, a decline of 0.8%.

Analysts observed that Trump's tariff actions have led to increased volatility in global markets. Although no tariffs were applied to India, Indian indices may still experience their impact.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that although the Budget is commendable, market conditions will likely be strained due to Trump’s tariffs and the increased global uncertainty resulting from these ‘initial round of tariffs.’ It's crucial to recognize that the 25% tariffs placed on Mexico and Canada are intended to penalize them for problems like immigration and the illegal trade of fentanyl.

Trump may again resort to tariffs against other nations for reasons unrelated to trade. Currently, the effects on India are minimal. Thus, the influence on the Indian market is expected to be limited. However, the rise of the dollar index above 109.6 may lead to increased selling by Foreign Institutional Investors (FIIs), putting further stress on the market.

The Indian stock markets concluded the Budget day flat after experiencing significant volatility during the Union Budget presentation by the Finance Minister.

The Nifty 50 index finished at 23,482.15, decreasing by 26.25 points (-0.11%), while the Sensex wrapped up at 77,505.96, showing a slight increase of 5.39 points (0.01%).

Analysts observed that the Budget prioritized consumption-driven growth, leading to considerable buying activity in specific sectors. The FMCG (Fast-Moving Consumer Goods) and Realty sectors climbed over 3% on the National Stock Exchange, indicating a favorable investor outlook. Conversely, sectors such as IT, metals, banking, and pharmaceuticals experienced sell-offs by the end of the session.

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

1. Equity benchmarks snapped three week’s losing streak while overcoming volatility amidst Budget, FII’s sell-off. The Nifty 50 settled the eventful week at 23,482, up 1.7% for the week. Sectorally, consumption, auto, realty outshone while IT, pharma took a breather. The weekly price action formed a bullish engulfing candle that engulfed past two week’s trading activity, indicating pause in downward momentum.
2. The index has undergone strong base formation (23,400-22,800) in the vicinity of 52 weeks EMA, over past three weeks. The breakout from this base formation coupled with falling trend line breakout clearly indicates conclusion of corrective phase in turn suggesting resumption of uptrend towards implicated target of 24,000 for the coming month. In the process, volatility would remain elevated tracking clarity on Trump Government’s new policies and RBI’s monitory policy. Hence, any dip from hereon should be used as buying opportunity in quality stock backed by strong earnings.
3. Key point to highlight is that, within a structural bull market, secondary correction is a common phenomenon. With current 13% correction in place, we believe the index has absorbed the pessimism around the global as well as domestic uncertainties, leading to bearish extreme reading on the sentiment as well as momentum indicators, suggesting limited downside going ahead. The formation of higher high after six weeks corrective phase, indicating shift in momentum that makes us revise support base at 22,800 as it is confluence of 123.6% external retracement of Nov-Dec up move (23,263-24,857) coincided with last week’s low of 22,787.
4. Structurally, since 2002, bull market average corrections have been to the tune of 14% while time-wise index has not recorded negative monthly close for more than 3-4 months. With 13% correction already in place we expect index to maintain the same rhythm and staged a strong rebound in coming weeks.
5. On the market breadth front, the percentage of stocks above 50 days SMA (within Nifty 500 Universe) has bounced from bearish extreme level of 10 last week, meanwhile monthly stochastic oscillator is placed at lowest level since 2008 at 21, indicating impending pullback.
6. On the sectoral front, BFSI, Auto, Consumption, Hospitality would be in focus.

Stock To Buy This Week - Dharmesh Shah

Dharmesh Shah of ICICI Securities recommends buying Bajaj Finance this week.

Buy Bajaj Finance in the range of 7,850-8,050 for the target of 8,920 with a stop loss of 7,448.

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 01/02/2025 or have no other financial interest and do not have any material conflict of interest.

The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.