Top Stock Recommendations: Dharmesh Shah of ICICI Securities suggests buying Larsen & Toubro, and Axis Bank today
Stock Market News: The domestic benchmark indices, the Sensex and Nifty 50, rose more than 2% to reach new highs on Friday after the Reserve Bank of India (RBI) increased the GDP growth forecast to 7.2% for 2024-25 from 7% before.
In day trading, the 30-share BSE Sensex rose 1,720.8 points, or 2.29%, to a new record high of 76,795.31. The benchmark closed at a record high of 76,693.36, up 1,618.85 points, or 2.16%.
The NSE Nifty rose 498.8 points, or 2.18%, to 23,320.20 throughout the day, trailing just the record intraday high by 18.5 points. The index closed at an all-time high of 23,290.15, up 468.75 points (2.05%).
According to Vinod Nair, Head of Research at Geojit Financial Services, the expectation of stability within the coalition government at the centre, together with the RBI’s higher adjustment of its FY25 growth prediction to 7.2%, fuelled a broad-based rally in the domestic market. The Indian market eclipsed its previous record high established on exit poll day, reaching a new height. Though the final mile to the inflation target remains difficult, investors expect the MPC to move one step closer to the easing cycle.
Also Read: Sensex, Nifty 50 settle at fresh closing highs; 5 key factors that drove the market today
The US labor market added more jobs than projected in May, defying earlier warnings of an economic downturn. According to data issued Friday by the Bureau of Labor Statistics, the labor market gained 272,000 non-farm payroll positions in May, considerably above predictions of 180,000. This might lead to the Fed not decreasing interest rates in the near future, leading the market to decline and the dollar to strengthen, according to market experts.
The market outlook will be dictated by important domestic and global economic data. According to Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd, next week’s market will be guided by India WPI inflation, China CPI inflation, UK GDP data, US core CPI and CPI data, US PPI data, and the US Fed’s interest rate decision.
Also Read: Dividend Stocks: Tata Motors, HUL, Adani Ent, Bajaj Auto, among others to trade ex-dividend next week; Full list here
Market Outlook by Dharmesh Shah, Vice President, ICICI Securities
The Nifty 50 staged a stupendous recovery from the 200-day EMA (after witnessing a knee-jerk reaction post-general election outcome), highlighting inherent strength. Consequently, weekly price action formed a small bodied bear candle with a long lower shadow, highlighting elevated buying demand. The key point to highlight is that, the India VIX, which gauges market sentiment, has declined sharply by 32% and closed at a three-week low, indicating that market participants are now expecting low risk.
The Nifty 50 has recovered 10% from week’s low in just three sessions and recorded its highest ever weekly close. Going ahead, sustainability above 23,400 would pave the way towards 23,800 in the coming weeks. Failure to do so would lead to higher base formation in the 23,400–22,600 range amid stock-specific action. Therefore, any temporary breather from hereon should be capitalised as an incremental buying opportunity wherein immediate support is placed at 22,600. Our positive bias is based on the following observations:
• A) The Bank Nifty reversed strongly from its 52-week ema, maintaining its two-year rhythm, and is expected to head towards 51,000.
• B) The global setup continues to remain strong and acts as a tailwind, with prospects of interest rates cut now on the horizon.
• C) Brent prices are making lower high-low and are expected to remain in the $ 75-85 range for an extended period.
Structurally, the formation of a higher peak and trough signifies a robust price structure that makes us revise the support base at 22,600 as it is the confluence of:
• A) 20-day EMA is placed at 22,650
• B) 38.2% retracement of current up move 21,281-23,320, placed at 22,540
On the Bank Nifty front, we expect it to head towards 51,000 in the coming weeks, while strong support remains at 48,800.
Top Stock Recommendations:
Buy Larsen & Toubro in the range of ₹3,440-3,535 for the target of ₹3,870 with a stop loss of ₹3,280.
Buy Axis Bank in the range of ₹1,166- ₹1,188 for the target of ₹1,270 with a stop loss of ₹1,118.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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