Stocks to buy or sell: Dharmesh Shah of ICICI Securities suggests buying Sun Pharma shares on 12 May 2025

Stock market news: Indian stock markets in the week ahead, starting Monday, will be influenced by geopolitical events, especially the ongoing tensions with Pakistan, along with macroeconomic indicators and corporate earnings, according to market analysts.

The Nifty 50 wrapped up the week at 24,008.00, reflecting a decrease of 1.39%, while the Sensex closed at 79,454.47, down 1.30%.

The primary equity indices saw significant declines this week, largely due to rising geopolitical tensions between India and Pakistan in light of reports regarding drone and missile assaults.

The sell-off escalated on the last trading day of the week after the Indian Army reported multiple overnight drone and munitions assaults by Pakistani forces, intensifying concerns of further escalation. Foreign Institutional Investors (FIIs) sold shares worth ₹3,798 crores on May 9 when the conflict between India and Pakistan intensified. With a ceasefire now declared, experts suggest that FIIs may begin to increase their equity investments in India once again.

On the technical front, Dharmesh Shah, Vice President at ICICI Securities, expects Nifty 50 to consolidate in the 24,500-23,200 area during earnings season, where stock-specific movement would prevail.

Shah has recommended one stock 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 snapped three week's winning streak tracking escalated geopolitical tension and settled the volatile week at 24,008, down 1.4%. As a result, India VIX witnessed highest weekly close (21.54) since June-24, up 18%, indicating uncertainty in the market. Meanwhile, rupee tumbled sharply and settled the week at 85.46. Sectorally, auto outperformed while Realty, PSU Bank remained under pressure. The weekly price action formed a bear candle that engulfed last week’s trading range, indicating breather after three weeks sharp up move.
2. Amidst ongoing geopolitical worries, we expect Nifty 50 to consolidate in the broader range of 24,500-23,200 zone wherein stock specific action would prevail amid ongoing earning season. Meanwhile, de-escalation of arm conflict would be the key monitorable which would fuel the momentum for next leg of up move.
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. In the current scenario, post the knee-jerk reaction, we believe market will stabilise. Hence, we advise not to panic but rather build quality portfolios from medium to long term perspective amid ongoing earning season.
4. Structurally, we believe the index has formed a durable bottom around 22,000-21,800 zone as it staged a strong rally after resolving out of past two months base formation backed by faster retracement. Further, significant improvement in momentum as well as sentiment indicators suggest broader market participation that makes us believe, extended correction from hereon owing to escalated geopolitical tension would help the index to cool off overbought condition and gradually form a higher base which would pave the way for next leg of up move. Our constructive view is further validated by following observations which would act as cushion:

a. Persistent FII's inflow

b. The completion of India-UK Free Trade Agreement

c. Bilateral Trade Agreement between India and US would be the key monitorable

d. Further weakness in US Dollar index and Brent crude oil prices

• Amid heightened geopolitical worries we revise support base at 23,500-23,200 zone as it is confluence of 200 days EMA coincided with 50% retracement of recent rally off April lows of 21,743.

Stocks To Buy This Week - Dharmesh Shah

Dharmesh Shah of ICICI Securities recommends buying Sun Pharmaceutical Industries shares.

Buy Sun Pharma shares in the price range of ₹1,780 - 1,833. He has Sun Pharma share price target of ₹2,040, and suggests maintaining a stop loss of ₹1,687.

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 09/05/2025 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.