Stocks to consider for trading: Dharmesh Shah, a financial expert from ICICI Securities, recommends purchasing shares of HAL and Titan tomorrow.
Stocks to consider for trading: Stocks to consider buying or selling: The Nifty 50 and Sensex, India’s domestic benchmark indices, closed the week on a downward trend, signaling ongoing volatility in the market. The Sensex ended the week at 76,619.33 points, a decrease of 423.49 points or 0.55%, while the Nifty 50 finished at 23,203.20 points, down 108.60 points or 0.47%. Notably, the Nifty IT sector saw the most significant decline, dropping by 2.68%.
Analysts have pointed out that foreign portfolio investors (FPIs) selling off their holdings continues to put pressure on the indices. Additionally, the upcoming inauguration of Donald Trump is expected to bring more uncertainty to the markets, with investors closely watching his initial executive actions for potential impacts on tariffs and taxes.
Vinod Nair, Head of Research at Geojit Financial Services, noted that the market is likely to remain cautious in the short term due to moderate expectations for Q3 earnings and ongoing outflows from foreign institutional investors (FIIs), which could lead to increased volatility. Investors will also be closely monitoring the policies and statements of the incoming US president, particularly regarding tariffs. Furthermore, any rise in inflation in Japan or stricter policies from the Bank of Japan (BoJ) could negatively affect market sentiment.
This week, corporate earnings announcements will be in focus, with major companies like Dixon Technologies, L&T Finance, and Oberoi Realty reporting on January 20, followed by Tata Technologies and Dalmia Bharat on January 21.
On January 22, investors will be eagerly awaiting earnings reports from Polycab India, Persistent Systems, HDFC Bank, Tata Communications, Coforge, Hindustan Unilever, and Bharat Petroleum Corporation. The week will conclude with UltraTech Cement, Mphasis, Indus Towers, and Dr. Reddys Laboratories scheduled to report on January 23,
Market Outlook by Dharmesh Shah, Vice President at ICICI Securities
The equity benchmarks experienced losses for the second consecutive week, closing at 23,203, down 1%. Despite the volatility, the broader market managed to recover from intra-week losses and ended on a flat note. Profit booking was seen in the IT sector, while beaten down sectors like PSU Banks and Metals saw a bounce back due to oversold conditions. The weekly price action formed a doji star pattern, indicating a narrow trading range with stock-specific movements.
As we approach the key global event of the Trump Government’s inauguration, the market seems to be taking it in stride amidst a flurry of negative news. Once the anxiety surrounding the Trump event subsides, we anticipate a pre-budget rally.
Looking ahead to the upcoming week, we expect volatility to remain high. We foresee the Nifty 50 index gaining upward momentum and gradually moving towards 24,200 in the coming month, representing a 61.8% retracement of the Dec-Jan decline (24,857-23,047). However, this upward movement may not be linear, as volatility is expected to persist during the Q3FY25 earnings season. The key support level is set at 22,500.
Our positive outlook is based on several factors:
a. The Nifty has experienced a 12% correction over the past four months, bringing it to the 52-week EMA amidst oversold conditions. This suggests a potential impending pullback.
b. Improving global sentiment, fueled by lower-than-expected US inflation data, has boosted market confidence.
c. Despite facing challenges such as geopolitical concerns, continuous FII sell-offs, a depreciating rupee, and a muted earnings season, the index has weathered the storm over the past four months.
d. The US Dollar index has retreated after nearing the key resistance levels of 110-112, indicating overbought conditions. We anticipate a cooling off of the dollar index once
The market breadth has shown improvement, with 20% of stocks in the Nifty 500 universe currently trading above their 50-day SMA, compared to a November reading of 8%. Additionally, another breadth indicator, the Net of Advance-Decline, has rebounded after approaching bearish extremes of 480. Historically, such bearish extreme readings have led to pullbacks in subsequent weeks.
On the downside, critical support is located 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).
In terms of sectors, we maintain a positive outlook on BFSI, IT, Oil & Gas, Capital Goods & Infrastructure, while Metals and PSE offer a favorable risk-reward setup.
Stocks To Buy This Week – Dharmesh Shah
1. Buy Hindustan Aeronautics Ltd (HAL) in the range of ₹4,080-4,160 with a target of ₹4,685 and a stop loss of ₹3,665.
2. Buy Titan in the range of ₹3,320-3,380 with a target of ₹3,830 and a stop loss of ₹3,220.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.