Top Stock Recommendations: Dharmesh Shah of ICICI Securities suggests buying RIL, and Larsen & Toubro today

Stock Market News: The domestic benchmark indices, the Sensex and the Nifty 50, finished the special live trading session on Saturday, May 18, with gains, extending their current three-day rally driven by fresh foreign capital inflows and encouraging cues from across the globe. The small and mid-cap indexes outpaced the benchmark indices, and all sectoral indices finished in the green.

The 30-share BSE Sensex closed at 74,005.94 in the second special trading session, up 88.91 points, or 0.12%. The NSE Nifty 50 rose by 35.90 points, or 0.16%, to 22,502.00. For the broader market, the benchmark Nifty SmallCap 100 index ended 0.82% higher while the Nifty Midcap 100 index closed 0.51% higher. The India VIX ended the day 3.67% higher.

On Saturday, May 18, there were two special live trading sessions for the domestic benchmark indices. The first took place from a primary site from 9:15 IST to 10 IST, and the second from a so-called disaster recovery site from 11:30 IST to 12:30 IST.

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The benchmark indices had a solid run and recovered the losses from the previous week, according to Arvinder Singh Nanda, Senior Vice President of Master Capital Services Ltd. The BSE Sensex and Nifty 50 ended the week up 1.85% and 2.03%, respectively. The Sensex ended the week over the 74,000 mark, while the Nifty 50 recovered its 22,500 mark.

Major domestic and global economic data will shape the market’s outlook. The data that will drive the market includes the Manufacturing and Services PMI for India, the UK CPI Inflation Data, the Initial Jobless Claims data for the US, the S&P Global Manufacturing PMI, and the Q4 results.

Also Read: Q4 results: ONGC, ITC, NTPC, Sun Pharma, Nykaa among companies to declare earnings this week

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

The index staged a strong recovery from 100 days EMA and recouped most of last week’s losses. As a result, weekly price action formed a bull candle with small lower shadow, highlighting buying demand at elevated support base. As a result, our buy on dips strategy worked well. In the process, Nifty midcap clocked a fresh All Time High.

Going ahead, we reiterate our positive stance and expect Nifty to challenge All Time High of 22800 in coming weeks. In the process, volatility would remain high as expectations related to General election outcome would have bearing on market direction in the upcoming truncated week. Thus, capitalise dips as incremental buying opportunity to ride next leg of up move. Our positive stance is based on following observations:

A) Nifty 50 has historically corrected 6% during polling phase in past four elections and three times hit new highs around election outcome. In current scenario , index staged a rebound after correcting 4.5% from life highs.

B) Over 70% of Nifty constituents indicate further upsides at current juncture. Banking, capital goods, Oil & Gas, Power, Auto and FMCG heavyweights are indicating bullish undertone.

Also Read: NSE, BSE shut today on account of Lok Sabha Elections

C) Major global indices are at life highs. Although in the short term our markets are ignoring those cues, once General election related anxiety settles down, strong global setups would act as tailwind for further market direction.

D) India VIX has cooled off after sharp up move seen during past 2 weeks. The India VIX has a tendency to rise ahead of Election and eventually fizzles out post election outcome.

Structurally, formation of higher peak and trough makes us confident to revise support base at 22000 as it is 80% retracement of current up move (21,821-22,502).

Also Read: Stock market today: Sensex, Nifty 50 end in green in the second special trading session; all sectoral indices shine

Bank Nifty Outlook

Nifty Bank index formed a bullish piercing line pattern on weekly chart at lower band of rising channel that is in place since January 2024. In the coming week, expect index to consolidate in the range of 47,000-49,000 amid elevated volatility.