Stocks to buy or sell: Dharmesh Shah of ICICI Securities suggests buying HAL shares on 28 April 2025

Stock market today: The domestic benchmark indices, Nifty 50 and Sensex, made a modest climb at the start of trading on Monday, buoyed by stronger-than-anticipated earnings from major player Reliance Industries and favorable signals from Asian markets, although increasing geopolitical tensions between India and Pakistan limited the rise.

The Sensex surged by 456.05 points to reach 79,668.58 in early trading, while the Nifty 50 gained 112.85 points, totaling 24,152.20.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, mentioned that the increased uncertainty surrounding Indo-Pak tensions will impact the markets. It is quite challenging to determine the extent to which the market has factored this in. Based on the market's resilience, it appears that the possibility of these tensions escalating into a war has not been fully incorporated into market expectations.

It is crucial to note that markets often have a remarkable capacity to rise despite various concerns.

A significant factor behind the market's resilience is the continuous buying by FIIs, totaling ₹32,465 crores over the past eight days. FIIs have shifted to being consistent buyers, marking a sharp reversal from their previous selling approach. This change is largely influenced by the relative underperformance of US stocks, US bonds, and the dollar.

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

1. Equity benchmark pared initial gains tracking geopolitical worries. Nifty 50 settled the week at 24,039, up 0.6%. Broader market relatively outperformed as Midcap gained 1.5%. Meanwhile, beaten down IT index staged a strong recovery post Q4 earnings, up 7% for the week. The weekly price action formed a small bull candle with long upper shadow, indicating profit booking at higher levels after recent sharp up move. However, formation of higher high-low signifies that broader uptrend remains intact.
2. In the upcoming truncated week, we expect volatility to remain elevated tracking geopolitical worries wherein Nifty 50 is likely to consolidate in the broader range of 24,500-23,300 zone. We believe, over past two months index has formed a durable bottom. Hence, ongoing breather would help index to form higher base by cooling off the overbought condition after 12% rally seen over past three weeks and make market healthy.
3. Over past three decades there have been three major instances of escalations due to armed conflicts in India (i.e. Kargil War, 26/11, Pulwama attack). On each occasion, it formed major bottom once anxiety around the event settled down and garnered decent returns in subsequent three months. Even in current scenario, possibility of knee-jerk reaction on escalation of geopolitical worries cannot be ruled out. However, historical evidences suggest that market would eventually stabilise. Hence, we advise not to panic but rather build quality portfolios from medium to long term perspective amid ongoing earning season.
4. The blend of following parameters makes us believe that the index has formed a durable bottom. Tracking the historical data, benchmark index has staged a strong rebound after approaching the price and time wise correction. Key point to highlight is that, the current up move is backed by the faster pace of retracement, indicating structural turnaround that has been further validated by significant improvement in momentum, breadth as well as sentiment indicators.
5. Amidst ongoing volatility, following are the key monitorable which would act as tailwind:

a) Bilateral Trade Agreement between India and US

b) Continuation of FII's inflow

c) Further weakness in US Dollar index post breakdown from two years consolidation

d) Decline in Brent crude oil prices

6. We expect volatility to prevail amid ongoing global uncertainty coupled with geopolitical worries. However, recent faster pace of retracement clearly indicates structural improvement that makes us revise support base upward at 23,300 which is 38.2% retracement of the move from (21,743-24,359) coincided with 200 days EMA placed at 23,405.

Stocks To Buy This Week - Dharmesh Shah

Dharmesh Shah of ICICI Securities recommends Hindustan Aeronautics Ltd (HAL).

1) Buy HAL in the range of ₹4,140-4,240 for the target of ₹4,698 with a stop loss of ₹3,914.

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 25/04/2025 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.