Top Stock Recommendations: Dharmesh Shah of ICICI Securities suggests Adani Ports, and Bank of Maharashtra tomorrow

Stock Market News: The domesticbenchmark indices, the Sensex and the Nifty 50, plummeted on Friday as investors scrambled to book profits following a four-day record-breaking rise and a global sell-off spurred by an IT breakdown that caused gadgets to collapse worldwide. Drop in blue-chip Reliance Industries also plunged the benchmarks.

The Sensex touched a new all-time high of 81,587.76 in the initial phase of trading but failed to maintain the winning momentum, plummeting 738.81 points or 0.91% to end below the 81,000 level at 80,604.65. During the day, it dropped 844.36 points, or 1.03%, to 80,499.10.

The Nifty 50 fell 269.95 points, or 1.09%, to 24,530.90 after reaching a new record high of 24,854.80 during the opening bell. During the day, it dropped 292.7 points, or 1.18%, to 24,508.15.

According to Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd, the next Union Budget on July 23, 2024, stands out as the next focus point for the market, with strong expectations for growth-oriented measures. Several factors will impact market direction, including Q1FY25 earnings releases, local and international economic data, and larger global market patterns. Market sentimentwill be keenly tracked, as will foreign and domestic institutional investor activity (FII and DII) and crude oil prices.

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

• In line with our view, Nifty 50 resolved higher and approached our target of 24,700. Subsequently index pared initial gains and settled truncated week on a flat note. As a result, weekly price action resembles a Shooting Star candlestick pattern, indicating that the velocity of the upward momentum is fading away after 17% rally seen over past seven weeks that resulted into overbought condition.

• In the upcoming eventful week, we expect Nifty 50 to consolidate in 24,700-24,000 wherein volatility would remain elevated amidst Union Budget coupled with monthly expiry. Thus, only a sustenance above 24,700 post Union Budget outcome would open the door for next leg of up move. Failure to do so would lead to prolongation of consolidation amid progression of Q1FY25 earning season which would eventually make market healthy. Following are the key monitorable for the upcoming week:

• A) Budget outcome would dictate further course of action.

• B) Many Index heavy weights are lined up with their Q1FY25 earnings which would have bearing on the market movement.

• C) On the domestic broader market front, Nifty Midcap and Small cap indices have taken a breather after rallying 23% and 28% respectively off election outcome day low which hauled weekly stochastic oscillator in overbought territory, suggesting extended breather temporary breather wherein possibility of 5-7% correction in the broader market cannot be ruled out which has historically offered incremental buying opportunity in quality stocks.

• D) The breakout from 2 and half year’s base in US Small cap index (Russell 2000) signifies broader participation that bodes well continuation of ongoing bull run tracking rate cut expectations.

• Structurally, the formation of higher peak and trough signifies supportive efforts at elevated support base. As a result, strong support is placed at 24,000 as it is confluence of:

• A) 61.8% retracement of past four weeks up moves 23,350-24,854.

• B) July Month’s low is placed at 23,993.

On the Bank Nifty front, we expect index to consolidate in 52,800-51,500 range amid elevated volatility owing to Union Budget. Within which PSU Banks have regained upward momentum and settled the week on a positive note, indicating rejuvenation of upward momentum after four months breather.

Top Stock Recommendations

1. Buy Adani Ports and Special Economic Zone Ltd in the range of ₹1,465-1,500 for the target of ₹1,620 with a stop loss of ₹1,346.

2. Buy Bank of Maharashtra in the range of ₹65-67.50 for the target of ₹78 with a stop loss of ₹62.

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 19/07/2024 or have no other financial interest and do not have any material conflict of interest.

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.