Stocks to buy or sell: Dharmesh Shah of ICICI Securities suggests buying Tata Steel, Engineers India tomorrow – 24 March

Stock Market News: The benchmark indices in the domestic market, Sensex and Nifty 50, concluded the last trading session of the week on a positive note, as investors were attracted to large-cap stocks due to their favorable valuations.

By the end of the trading day, the Nifty 50 recorded a value of 23,350.40, which reflects an increase of approximately 159 points or 0.69 percent. The Sensex also saw gains, rising by 557.45 points or 0.73 percent to reach 76,905.51.

Vinod Nair, Head of Research at Geojit Financial Services, indicated that the domestic market has wrapped up the week with a steady recovery. The expected decrease in risk-free rates and the drop in the dollar index are encouraging capital flows back to emerging markets. Foreign Institutional Investors (FIIs), who have been minimising their selling, are starting to become net buyers, motivated by dovish indications from the US Federal Reserve, which imply the potential for two interest rate cuts within this year. This has rekindled optimism in the domestic market.

The upcoming week promises to be eventful for both global and Indian markets, influenced by important releases of macroeconomic data and the decision by the US president to impose reciprocal tariffs on other nations. Market sentiment will be influenced by PMI data, GDP growth, retail sales, and inflation figures, as pointed out by Puneet Singhania, Director at Master Trust Group.

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

1. Nifty 50 outperformed the global peers and posted strongest weekly gains in 4 years, to settle the week at 23,350, up 4.25%. Financials remained at forefront while beaten down defence, realty, PSU staged a strong rebound by gaining >7%, each. The broader market outperformed as Nifty Midcap and Small cap gained >8% for the week. The weekly price action formed a sizable bull candle, indicating continuation of positive momentum.
2. The breakout from six months falling trend line backed by across sector participation augurs well for extension of ongoing pullback towards 23,800 in coming weeks. However, the move towards 23,800 would not be in a linear manner as possibility of temporary breather after 1000 points rally (seen over past 5 sessions) cannot be ruled out. Hence, bouts of volatility amid tariff related uncertainties should be used to accumulate quality stocks as strong support is placed at 22,600. Our constructive bias is further validated by following observations:

a. Bank Nifty recouped past five weeks decline in just a single week. Faster pace of retracement signifies structural turnaround that would provide impetus for next leg of up move as Bank Nifty carries 36% weightage in Nifty 50.

b. The % of stocks above 50 days SMA (Nifty 500 Universe) has seen a significant improvement with a reading of 49% compared to early March reading of 7%, indicating broader market participation.

c. The weakness in the US Dollar index and soft crude oil prices bodes well for emerging markets. Meanwhile, strengthening Rupee would further boost the market sentiment.

3. Structurally, past three decades data suggest that, the average drawdown in Nifty 50 below its 52-week EMA has been 6%. In tandem with that, even in current scenario index staged a recovery from same reading of 6% and reached in the vicinity of 52-week EMA. Historically, buying near 52 weeks EMA has offered favorable risk reward with a median return of 23% in next 12 months.

4. On the broader market front, Nifty midcap and small cap indices have seen a rebound after approaching maturity of price and time wise correction. Historically, maximum average correction in Midcap and small cap indices have been to the tune of 27% and 29% while time wise such correction lasted for 5 months. Subsequently, both indices have seen 28% returns in next six months.

5. The formation of higher peak and trough signifies buying demand at elevated support base that make us revised support base upward at 22,600 as it is 80% retracement of the current leg of up move (22,353-23,402).

Stock To Buy This Week – Dharmesh Shah

Dharmesh Shah of ICICI Securities recommends buying Tata Steel, and Engineers India this week.

1) Buy Tata Steel in the range of ₹153-159 for the target of ₹176 with a stop loss of ₹146.

2) Buy Engineers India in the range of ₹161-166 for the target of ₹188 with a stop loss of ₹149.

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 21/03/2025 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.