Stocks to buy or sell:Dharmesh Shah of ICICI Securities suggests buying Larsen & Toubro, JSW Energy shares on 19 May

Stock market news: The key domestic indices, Sensex and Nifty 50, closed lower on Friday due to profit-taking in IT stocks and Bharti Airtel shares following a significant rally in the previous session.

The Sensex fell by 200.15 points, or 0.24%, settling at 82,330.59. At one point during the day, it dropped by 383.79 points, or 0.46%, reaching 82,146.95. Meanwhile, the Nifty 50 decreased by 42.30 points, or 0.17%, to end at 25,019.80.

Despite this, both the Sensex and Nifty 50 recorded gains for the week as investors responded positively to a ceasefire with Pakistan, trade discussions with the United States, and the anticipation of domestic interest rate reductions. The Nifty 50 increased by 4.21% to 25,019.80 over the week, while the Sensex saw a rise of 3.62% to 82,330.59.

Market analysts pointed out that the ceasefire announcement between India and Pakistan alleviated concerns over rising military tensions and fostered a risk-on atmosphere, while the US-China trade agreement, advancements in India-US trade discussions, and a decline in domestic inflation helped maintain the weekly growth.

On the technical front, Dharmesh Shah, Vice President at ICICI Securities, expects Nifty 50 to head towards 25,500 in coming weeks, he suggests 24,400 would continue to act as a key support.

Shah has recommended two stocks to buy for short-term. Here's what he expects from Indian stock market next week, along with his stock recommendation.

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

1. Equity benchmark sailed through the geopolitical volatility and staged a strong rebound as US-China trade deal further boosted the market sentiment. As a result, Nifty 50 reclaimed 25,000 mark (after mid-October 2024) and settled the week at 25,020, up 4.2%. Broader market remained at the forefront gaining >7% led by sectors like Defence, Metal, Realty, Capital Market. The weekly price action formed a sizable bull candle carrying higher high-low, indicating resumption of uptrend. India VIX plunged 22% once the anxiety around the geopolitical worries settled down, indicating improved market sentiment.
2. Breakout from three weeks consolidation 24,500-23,200 resulted into acceleration of upward momentum. Significant improvement in market breadth signifies broader market participation that makes us reiterate our positive stance of Nifty 50 heading towards 25,500 in coming weeks. Meanwhile, 24,400 would continue to act as key support.
3. On the broader market front, Nifty midcap and small cap index staged a strong recovery after approaching maturity of price and time wise correction. On the expectation of catch-up activity, broader market is likely to outperform the benchmark as currently Nifty 50 is just 5% away from its All-Time High while Midcap and small cap indices are 7% and 12% away from its All Time High. Historically, maximum average correction in midcap and small cap indices have been to the tune of 27% and 29% while time wise such correction lasted for 7-8 months. Subsequently, both indices have seen 32% and 28% returns, respectively in next six months.
4. Our constructive bias on the market is further validated by following observations:

a. Return of FII’s: Past three decades trend suggest, FII’s selling of ₹>30,000 cr. during any quarter, the subsequent 12 months Nifty 50 returns have averaged around 28%. In most cases FII’s returned back leading to subsequent market rally

b. US-China trade deal has eased the recession worries in US that in turn bodes well for future rate cuts

c. Global Macros: Risk on sentiment kicks in tracking tariff development coupled with cool off in US 10-year bond yield, crude oil prices, and weak U.S. dollar

d. Market Breadth: Currently 89% stocks of Nifty 500 universe are now trading above their 50-DMA and 42% above their 200-DMA compared to April month’s lowest reading of 27 and 15 respectively, clearly indicating pick up in broader market participation

5. The breakout from three weeks consolidation confirms resumption of uptrend that makes us revise support base at 24,500 as it is 50% retracement of recent rally (21,743-25,116).

Stocks To Buy This Week - Dharmesh Shah

Dharmesh Shah of ICICI Securities recommends buying Larsen & Toubro, and JSW Energy shares next week.

1) Buy Larsen & Toubro in the range of ₹3,490-3,610 for the target of ₹3,928 with a stop loss of ₹3,264.

2) Buy JSW Energy in the range of ₹486-504 for the target of ₹560 with a stop loss of ₹459.

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 16/05/2025 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.