By Ajit Mishra
Markets have been trading in a narrow range around their record highs, pausing after the recent surge. Investors are adopting a cautious “wait and watch” approach ahead of the outcome of U.S. Federal Reserve meeting scheduled for September 18.
On the sectoral front, banking and financial stocks are showing renewed momentum, while other sectors are witnessing rotational buying. Meanwhile, broader indices are also edging higher, though market breadth suggests selective participation.
Globally, U.S. markets have seen a strong recovery in the past week. The Dow Jones Industrial Average (DJIA) has reclaimed its record high, and the S&P 500 appears poised to test new highs soon. In summary, market sentiment remains positive ahead of the Fed’s decision. With a 25 basis point rate cut already factored in, significant market volatility is unlikely.
However, the Fed’s guidance on inflation, growth, and future rate cuts will be crucial in shaping broader market sentiment, particularly concerning global liquidity and risk appetite. A 50 basis point cut could fuel a positive market response, especially in emerging markets like India, though it might also raise concerns about the health of the U.S. economy.
Given the current market landscape, we recommend focusing on banking, financials, IT, real estate, and metals for long trades, while being selective in other sectors. As broader indices gain traction, it’s essential to prioritize fundamentally strong midcap and smallcap stocks, given the selective participation.
We have highlighted the key levels for the Nifty and Banking Index, along with list of stocks which traders can consider for short term trades based on the market scenario.
Nifty (CMP: 25,423.80) –
The current market trend is expected to persist, with an immediate target of 25,550 for the Nifty. The recent positive momentum from leading private banks is promising, and if sustained, could propel the index to the next milestone of 26,000. We advise following a “buy on dips” strategy, with strong support in the 24,750-25,000 range.
Bank Nifty (CMP: 52,244) –
The banking index is steadily advancing after breaking past the resistance at its previous swing high of 51,750. Before retesting its record high of 53,357.70, it may encounter resistance around the 52,900 zone. On the downside, the 51,300-51,700 zone is expected to provide support in case of a dip.
The movement has been primarily driven by private banking heavyweights, with ICICI Bank leading the charge. In contrast, the PSU banking sector has been underperforming and is likely to remain range-bound in the near term. Traders are advised to focus on private banking majors for long positions.
Stocks to Watch
Bullish- Apollohosp, Axis Bank, Bhartiartl, Chamblfert, Havells, HCL Tech, Heromotoco, Kotak Bank, LT
Bearish- BEL, HAL, IRCTC, Navinfluor, PFC, RBL Bank, Recltd, Tatachem, Tatamotors
(About The Author: Ajit Mishra, SVP- Research, Religare Broking.)
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