Indian Stock Market Enters Consolidation Phase After Recent Rally
The domestic benchmark indices in India entered a phase of consolidation on Wednesday, following the recent rally that was spurred by the India-US agreement. The indices started off flat but managed to show slight gains as foreign inflows returned to the market, indicating continued investor confidence.
Market Opening and Performance
The Nifty 50 index commenced trading at 25,997.45, rising by 62.30 points or 0.24%. Meanwhile, the BSE Sensex opened the day at 84,339.15, increasing by 65.23 points or 0.08%. This modest upward movement came after a period of significant gains, suggesting that the market is taking a breather while maintaining its positive trajectory.
Analyst Insights and Institutional Activity
Market analysts have indicated that the overall trend remains positive, even with the current range-bound fluctuations. In terms of institutional activity, domestic institutional investors (DIIs) recorded a net purchase of ₹1,174.21 crores on Tuesday. Foreign investors also noted a positive net investment of ₹69.45 crores, which has bolstered market sentiment and provided a cushion against potential downturns.
Nifty 50 Outlook by Sagar Doshi
Sagar Doshi, Senior Vice President- Research at Nuvama Professional Clients Group, provided a detailed analysis of the Nifty 50. He noted that the index ended +1% higher cumulative for the first two days of this week after its strong weekly closing observed on Friday. However, it spent most of the session within a 150-point band in the past two days.
Doshi views Nifty 50 as a buy in dip candidate for levels around 25,940 / 26,130, while support can be trailed higher to 25,640 odd from 25,450. Importantly, Nifty 50 is also forming a bullish (inverted) head and shoulder pattern on hourly charts over the past one-month scale, with a neckline above 25,940, which is a positive technical indicator.
Bank Nifty Performance
Bank Nifty continued its outperformance against Nifty 50, as it had reversed from last week’s support below 59,700. Overall, the index continues to head for 60,800 / 61,500 with support seen at 60,060, which can be trailed higher once Bank Nifty closes above 60,800. This suggests resilience in the banking sector, which is often a bellwether for the broader economy.
Stocks to Buy on Wednesday
On stocks to buy on Wednesday, Sagar Doshi of Nuvama recommended three stocks: Bharat Petroleum Corporation Ltd (BPCL), Power Grid Corporation of India Ltd, and Steel Authority of India Ltd (SAIL).
BPCL (BUY):- LCP: ₹386
- SL: ₹370
- TGT: ₹418
After witnessing a higher ever weekly closing in the week passed by, BPCL has been witnessing intraday buyers on trades near 380, which can now be seen as an immediate support. Given the tailwind in the PSE and OMC space, fresh all-time highs are expected to continue towards 420 per share.
Power Grid Corporation of India (BUY):- LCP: ₹294
- SL: ₹282
- TGT: 320
A large candle breakout was seen on an 18-month falling trendline after the stock reversed from a 5-year rising trendline support. The stock went ex-dividend earlier this week after crossing and sustaining above its 200 DMA. With prices now holding at a 3-month high, Power Grid has more legs to this ongoing rally on the upside.
SAIL (BUY):- LCP: ₹161
- SL: ₹156
- TGT: ₹174
SAIL had been rising in an upward moving channel for the past 55-60 odd weeks. The stock has now given a breakout above the highs of this channel, which could allow a steeper rise from here on. The stock has also ended at a fresh 20-month high on daily and weekly charts. Given the tailwind from metal and steel as a sector, SAIL is likely to outperform other PSE names in the short term.
Disclaimer: 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 decision.
