Stocks to buy or sell: Dharmesh Shah of ICICI Securities suggests buying Ultratech Cement today - 27 January 2025

Stock Market News: The domestic benchmark indices, Nifty 50 and Sensex, experienced a significant drop at the start of trading on Monday following US President Trump's decision to impose tariffs on Columbia, which negatively impacted investor confidence. The Nifty 50 index began trading at 22,940.15, decreasing by 152.05 points or 0.66%, while the Sensex fell by 490.03 points or 0.64%, opening at 75,700.43.

Analysts have pointed out that the use of tariffs and visa restrictions as tools in the current US-Colombia conflict has caused significant disturbances in global markets. Although trade between the US and Colombia is not extensive, the repercussions for other US trade allies, such as Mexico, Canada, Europe, and China, have been concerning.

Nifty 50 and Sensex, experienced losses on Friday, marking the third consecutive week of declines amid rising worries about slowing corporate earnings. The Nifty 50 closed down 0.49% at 23,092.2, while the Sensex dropped 0.43% to settle at 76,190.46. Throughout the trading session, both indices oscillated between gains and losses.

This decline is notable particularly because it contrasts with a positive trend in global markets. These markets were boosted by expectations of a more lenient US trade policy towards China and potential reductions in interest rates, following comments from President Donald Trump.

In India, however, investors are struggling to find good news as the ongoing earnings season has largely been described by analysts as "disappointing" for the third quarter. The combination of this disappointing earning outlook and the uncertainty surrounding US trade policies since Trump took office has cast a shadow over Indian markets, leading to a weekly loss of about 0.5% for the benchmarks.

Vinod Nair, Head of Research at Geojit Financial Services, noted that the market wrapped up the week on a pessimistic note, characterized by a sell-on-rally mentality. The realty sector experienced the steepest declines as investors grew cautious due to shrinking prospects for interest rate cuts and disappointing industry data. The PMI figures added to the bearish sentiment, coming in weaker than anticipated.

On a slightly brighter side, the IT sector delivered results that met expectations, and there are early signs of a rebound in discretionary spending, suggesting potential recovery. Key upcoming events, such as the FOMC meeting and the Union Budget, are likely to significantly impact market sentiment. The FOMC's hawkish stance continues, although there are murmurs from Trump regarding rate cuts that could inject a favorable outlook in the future. While expectations surrounding the Union Budget are generally low, the absence of negative surprises during this critical event could help ease market anxieties.

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

1. Equity benchmarks edged lower over third week in a row tracking elevated global volatility and settled the volatile week at 23,092, down 0.5%. In the process, broader market relatively underperformed as Nifty Midcap and smallcap lost 2.5% and 4%, each.
2. Sectorally, IT, FMCG outshone while realty, energy extended losses. The weekly price action resulted into small bear candle, indicating narrow trading range amid corrective bias.
3. We expect the index to undergo base formation in the vicinity of key long-term 52 weeks EMA amid oversold conditions while absorbing host of negative news. Hence, a decisive close above 23,400 would be the key monitorable which would open the door for pre-budget rally and eventually head towards 24,200 in February. However, move towards 24,200 would not be in a linear manner as bouts of volatility cannot be ruled out owing to US Fed meet outcome, monthly expiry week coupled with Q3FY25 earnings of many heavy weight companies which would have bearing on the market. In the process, 22,500 would continue to act as key support.
4. Key point to highlight is that, since 2002, Nifty 50 has not recorded negative close for more than 3 consecutive months wherein average correction has been to the tune of 14% (barring 2008 & 2020 scenario). Buying in such scenario has been fruitful as Nifty 50 has garnered 15% returns in subsequent three months. In current scenario, with 13% correction already in place, we expect index to maintain the same rhythmas downside remains limited with key support at 22,500 levels.
5. Meanwhile, the global market sentiments have been boosted amidst Trump government optimism. As a result, most of the global equity markets reclaimed their Life Time Highs. We expect, catch up activity should be seen post recent underperformance against global peers.
6. On the global macro front, the dollar index has been replicating the move seen during 2016-17 (Trump phase I), where it topped out in Mid-January of 2017 and subsequently declined over next couple of quarters, resulting into risk on sentiment. Further, the formation of evening star candlestick pattern on weekly chart, signifies corrective bias wherein upside is capped at 110 levels.
7. On the downside, critical support is placed at 22,500 which aligns with the implied target of the recent consolidation breakdown (24,200–23,300) and coincides with the 50% retracement of the October 2023 to September 2024 rally (18,838–26,277).
8. Sectorally, we remain constructive on BFSI, IT, Capital Goods & Infra while Metals, Consumption and PSU offers favourable risk reward set up.

Stock To Buy This Week - Dharmesh Shah

Dharmesh Shah of ICICI Securities recommends buying Ultratech Cement this week.

1. Buy Ultratech Cement in the range of 10,900-11,300 for the target of 12,430 with a stop loss of 10,440.

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 24/01/2025 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.