HDFC Securities Analyst Recommends Buying Oracle Financial Services and Sun Pharma Shares

Stock Market Sees Sharp Selloff Amid Weak Global Cues

The Indian equity markets witnessed a sharp, broad-based selloff in intraday trade on Monday, 18 May, amid weak global cues and heightened risk aversion. This resulted in the benchmark indices, Sensex and Nifty 50, dropping more than 1% each. The BSE Sensex plummeted over 1,000 points to hit an intraday low of 74,180, while the NSE Nifty 50 slipped more than 1% to a low of 23,317 during the session.

The selling pressure persisted strongly across the broader markets, resulting in the BSE midcap and smallcap indices dropping by as much as 2.5%. This significant drop erased nearly ₹9 lakh crore in investor wealth in just one session, bringing the total market capitalisation of BSE-listed companies below ₹452 lakh crore, down from approximately ₹461 lakh crore in the prior session.

Market Outlook

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The Nifty 50 has corrected by over 1,250 points from its recent swing high of 24,601 and is now approaching a crucial swing low support at 23,262. The index is currently trading below its 20, 50, 100, and 200-day EMAs, indicating a well-established bearish trend across multiple time frames. The uptrend in Brent crude prices coupled with the depreciation of the Indian Rupee against the US Dollar continues to act as key macro headwinds for domestic equities.

On the sectoral front, Pharma and Healthcare are exhibiting notable relative strength, while the IT index appears to be stabilising and could witness a technical pullback from lower levels. In contrast, rate-sensitive sectors remain under pressure, and traders are advised to maintain a cautious stance with limited exposure to these segments.

Global Markets

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Global markets, after a phase of steady upward movement, have started showing signs of increased volatility, which could further influence near-term sentiment in domestic markets. Technically, a decisive breakdown below 23,262 may accelerate the downside momentum, with the next immediate support placed around 23,100, aligning with the 61.8% retracement of the prior up move from 22,182 to 24,601. On the upside, a sustained move above 23,800 is essential to improve the near-term technical outlook.

Stock Recommendations

Two stocks that are recommended for buy in the near-term are:

• Oracle Financial Services Software: Target ₹9,800, Stop-loss ₹8,700. The stock has formed a bullish "hammer" candlestick pattern on the daily charts and has broken out from a bullish "Flag" pattern.
• Sun Pharmaceutical Industries: Target ₹1,950, Stop-loss ₹1,825. The stock has surpassed the trip top resistance placed near 1850 and has shown rising volumes.