Stocks to buy or sell: Dharmesh Shah of ICICI Securities recommends buying SBI, Nalco tomorrow – December 9

Stock Market News: The domestic benchmark indices, Nifty 50 and Sensex, capped off their best week since June on Friday, primarily driven by gains in the financial sector. This surge came after the central bank’s decision to reduce the cash reserve ratio (CRR) that banks are mandated to maintain, which has effectively eased monetary conditions. The move is seen as a positive signal for liquidity in the market, encouraging investor confidence and contributing to the upward momentum in stock prices.

The Nifty 50 closed 0.12% lower at 24,677.8, while the Sensex fell 0.07% to 81,709.12. However, both the Nifty 50 and the Sensex gained 2.3% and 2.4%, respectively, this week, marking their best performance since early June, when the national election results confirmed policy continuity.

Vinod Nair, Head of Research at Geojit Financial Services, highlighted that although there was a decline in the Q2 growth rate, the market demonstrated a resilient and positive outlook throughout the week. The core sector output in October, along with stable services PMI data, indicates promising signs of recovery. Furthermore, the renewed interest from foreign institutional investors (FIIs) in India, driven by expectations of a dovish monetary policy from the Reserve Bank of India (RBI), has contributed positively to market sentiment.

The RBI’s updated growth forecast for FY25 appears more realistic, reflecting a thoughtful approach to economic conditions. Additionally, by reducing the Cash Reserve Ratio (CRR) by 50 basis points, the RBI is proactively enhancing liquidity in the financial system while underscoring the essential goal of maintaining macroeconomic stability.

According to a report from Reuters, US job growth is expected to have significantly increased in November, rebounding from the setbacks caused by hurricanes and strikes.

As per a recent survey by Reuters, nonfarm payrolls are expected to have increased by approximately 200,000 jobs last month, reflecting a positive trend in employment. Estimates among economists ranged from 155,000 to 275,000 jobs, indicating a variety of perspectives on economic growth.

Market experts anticipate that the upcoming week will provide valuable insights into market direction, particularly with the release of US payroll data and the US Consumer Price Index (CPI) inflation data.

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

Equity benchmark endured its northbound journey and extended gains over third week in a row tracking firm global cues. Nifty 50 gained 2% to settle the week at 24,678. Broader market endured its relative outperformance as Nifty Midcap, Smallcap gained >4%. The weekly price action formed a strong bull candle carrying higher high-low formation, indicating acceleration of up move.

On expected lines, Nifty 50 logged a resolute breakout from five weeks consolidation (24,500-23,300) that augurs well for extension of ongoing up move towards 25,200 in coming weeks. Hence, any temporary breather from hereon should be utilized to accumulate quality stocks on dips as immediate support is placed at 24,000. Our positive stance on index is based on following observations:

a) The follow through strength in Bank Nifty post two months consolidation breakout signifies acceleration of upward momentum that makes us believe, Bank Nifty would eventually challenge lifetime highs of 54,400 in coming weeks.

b) The strong recovery in Nifty midcap and small cap index (9% and 12%, respectively) resulted into breakout from three months falling trend line. Nifty small cap index is just 1% away from All Time High.

c) Revived traction in broader is backed by improvement in market breadth that bodes well for durability of ongoing uptrend. Currently, 57% stocks of Nifty 500 universe are trading above 50 days SMA compared to last week’s reading of 35%.

d) Global Market: Global equity markets like DJIA, DAX have been clocking fresh All Time Highs. We expect catch up activity can be seen in domestic market tracking its positive correlation with developed markets.

e) FII’s have turned positive during the week as they remained buyer on three out of five sessions. The FII’s come back would boost the market sentiment going ahead.

Sectorally, BFSI, Capital Goods & Infra, IT, pharma would be in focus while realty, metal offer bargain buy opportunity.

Structurally, Nifty 50 and Bank Nifty maintained the rhythm of arresting intermediate correction within 12% and 9%, respectively, indicating robust price structure that makes us revise support base at 24,000 levels as it is confluence of:

a) 50% retracement of current rally (23,263-24,857) at 24,060.

b) Last week’s low is placed at 24,008.

Stocks To Buy This Week – Dharmesh Shah

1. Buy State Bank of India (SBI) in the range of 830-863 for the target of 950 with a stop loss of 787.

2. Buy Nalco in the range of 242-248 for the target of 266 with a stop loss of 235.

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 06/12/2024 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.