Top Stock Recommendations: Dharmesh Shah of ICICI Securities suggests buying Infosys, and Deepak Nitrite today

Stock Market News: The domestic benchmark indices, the Nifty 50 and Sensex, began at all-time highs on Monday, reflecting advances in their Asian counterparts and propelled by information technology firms. The optimism among investors stemmed from expectations of a rate cut in September in the US.

At a record high of 25,334.40 points, the Nifty 50 index began 0.39% higher, while the Sensex opened 0.45% higher, at 82,732.95.

The market has entered a zone of steady but modest upmove, according to Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. This is because of the accumulation of quality largecap stocks. Improved market sentimentshas also contributed to FIIs becoming buyers last week, mostly as a result of several sizable bulk acquisitions. The Indian stock market will set a record if it ends higher today, and the Nifty 50 will have posted a record 13-day winning run. This is good in terms of sentiment.

The market will be keenly observing future US economic data before to the Federal Open Market Committee's (FOMC) next meeting, which is planned for mid-September, according to market analysts. This week will see the release of many important indicators, including the Manufacturing PMI, Non-Farm Payroll, and Unemployment Claims, all of which have the potential to greatly affect market mood. Furthermore, China's PMI data and speculation on possible economic stimulus plans there will probably maintain the commodities market's attention.

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

The index stated the week on a positive note and strengthen further as the week progressed. The weekly price action resulted into a bull candle carrying higher high-low, indicating continuation of upward momentum. In the process, Nifty midcap, small cap recorded fresh All Time High.

The strongest winning streak in three decade signifies rejuvenated uptrend that makes us revise target to 25,800 in coming month. However, the move towards 25,800 would be in a non linear manner amid short term overbought conditions. Henceforth, buying dips would be the prudent strategy to adopt as strong support is placed at 24,700 which we expect to hold. Only a decisive close below previous session lows, would signal pause in upward momentum and retracement of recent rally can not be ruled out. Our overall bullish stance is backed by:

A) The current up move is backed by improvement in multi sector participation. We expect short term sectoral rotation to provide cushion.

B) Global headline indices, led by US are in steady uptrend. From directional perspective, continuation of global risk-on environment would lead to bullish spill over barring transitional volatility episodes.

C) Continued strong domestic fund flows provide depth for markets while prospects of lower interest rates in US raise prospects of incremental FII flow going ahead.

On the sectoral front, IT, Pharma, Consumption are expected to outperform while Metals are poised with favourable risk-reward proposition. Market breadth for the week was flat as some profit taking in Mid and small cap segment was visible at new highs. We expect retracement of recent rally to pan out amid sectoral rotation.

Structurally, retracement of the rally is a normal phenomenon amid bull market and offers an incremental opportunity to buy. We believe over next few weeks, such retracement would offer buying opportunity from long term trend perspective. Hence we revise support base at 24,700 as it is confluence of 20 days EMA coincided with 50% retracement of ongoing up move (24,100-25,268).

On the Bank Nifty front, short term trend remains positive with higher high-low sequence on weekly time frame. We maintain positive stance and expect index to gradually head towards 51,800 levels. Hence, buying dips will be a prudent strategy. Meanwhile, short term support is placed at 50,300 which is confluence of a) 61.8% retracement of past three-week gains, b) past two week low.

Top Stock Recommendations

1. Buy Infosys in the range of ₹1,900-1,950 for the target of ₹2,110 with a stop loss of ₹1,768.

2. Buy Deepak Nitrite in the range of ₹2,850-2,910 for the target of ₹3,275 with a stop loss of ₹2,668.

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 30/08/2024 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.