Domestic equity market benchmarks BSE Sensex and NSE Nifty 50 were trading over 1 per cent higher on monthly F&O expiry day. Today’s jump in the market came after the US Fed chair Jerome Powell dismissed chances of a recession, and went on with a 75 bps interest rate hike. NSE Nifty 50 soared 1.2 per cent or 200 points to a day’s high of 16,856.30. Analysts at ICICI direct Research said during the past one month, equity benchmarks have staged a strong comeback, fueled by weakening of momentum in crude oil and fall in industrial commodities. Analysts have upgraded their Nifty target of 16600 to 17500 for the coming months, maintaining the strong support at 16000.
Why 17500 looks optimistic?
Analysts advised investors to use dips as an incremental buying opportunity. The research firm noted that since October 2021 peak of 18600, on two occasions post falling channel breakout Nifty has retraced 80% of preceding corrective phase. At current juncture, a similar breakout has panned out and we expect Nifty to maintain the same rhythm and head towards 17500 being 80% retracement of two month decline (18100-15200). It also added that since 2008, on six occasions index has formed a durable bottom after the percentage of stocks above 200 DMA (Nifty 500 universe) has touched the extreme low reading below 15. Subsequent rallies in each of these instances measured minimum 20% from lows.
The report further noted that the sharp decline in crude oil prices coupled with industrial commodities and cool off in India VIX highlights improvement in market sentiment that augurs well for extension of ongoing rally. The Nifty midcap and small cap indices also mirrored the move in benchmark and staged a pullback after approaching price-wise maturity of 25% and 40%, respectively, ICICI direct Research added.
Top sectors, stocks to buy
BFSI: State Bank of India (SBI), Axis Bank, Housing Development Finance Corporation (HDFC), Canara Bank, Bajaj Finance, Sundaram Finance
IT & Telecom: Infosys, TCS (Tata Consultancy Services), Reliance Industries (RIL), L&T Infotech, Coforge, Happiest Minds, KPIT Technology
Capital goods: L&T, ABB India, BEL, Siemens, Thermax, SKF Bearing, Ingersoll-Rand India, KSB
Consumption & Retail: ITC, Asian Paints, Titan Company, Havells, KKCL, Trent, TTK Prestige, Astral
Auto: Maruti Suzuki India, Ashok Leyland, Gabriel India, MM Forging, Minda Inds, Balkrishna Industries
Infra and Realty: Ultratech Cement, DLF, Brigade Enterprise, Phoenix Mills
Pharma & Chemicals: Sunpharma, Dr Reddy, Abbott India, Aster DM, Caplin Point, Navin Fluorine
Metal: Tata Steel, JSW Steel, Hindalco Industries, Coal India, JSL
Others: Adani Port, Indian Hotels, Mahindra Holidays, TCI Express, Greaves Cotton, Philips Carbon, Kajaria Ceramics, Dr Lal Path, Concor
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