ICICI Securities Analyst Advocates Buying Reliance and Titan Shares

Sensex and Nifty 50 Surge Over 1% on Friday, April 10, Amid Global Market Favourability

The benchmark stock market indices, Sensex and Nifty 50, experienced a significant rise of over 1% on Friday, April 10, driven by increased purchases in banking stocks and a favourable trend in global markets. Analysts noted that investor confidence grew amid expectations of a de-escalation in the West Asia crisis in light of upcoming US-Iran talks and declining crude oil prices.

The 30-share BSE Sensex soared by 918.60 points or 1.20% to close at 77,550.25, after reaching a peak of 990.85 points or 1.29% at 77,622.50 during the day. The Nifty 50 saw an increase of 275.50 points or 1.16% to finish at 24,050.60.

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Market Outlook by Dharmesh Shah, Vice President, ICICI Securities The Indian equity benchmarks recorded their strongest weekly gains in over five years, snapping a six-week losing streak as a temporary ceasefire led to a significant cooling of Brent crude, which fueled the momentum in the global equities. The Nifty 50 settled the week at 24,050, up 5.9%. The Nifty Midcap and Smallcap outperformed, gaining 7.5% each, led by a rebound in beaten-down sectors like Realty, Auto, and Defence space, gaining around 10%.

Technical Outlook Supportive efforts emerged from the 200-week EMA, coupled with ease in geopolitical tension, infused momentum in equities. The weekly price action resulted in a strong bull candle with a higher high-low formation, indicating a resumption of the uptrend. Key points to highlight include the confirmation of the conclusion of the corrective phase by fulfilling prerequisites like closing above the last week's high and sustaining above the short-term moving average.

Notably, the Nifty 50 has seen a 1,800-point rally in just 4 sessions, pushing the daily stochastic oscillator into overbought territory (placed at 94), suggesting a possibility of a couple of days' breather at higher levels. However, such a breather should not be construed as negative, as it would make the market healthy and establish the stage for the next leg of the up move towards 24,800 in the coming weeks.

Hence, any decline from hereon should be capitalized to accumulate quality stocks backed by strong earnings, with strong support placed at 23,000. In the process, volatility would remain elevated on the back of geopolitical developments and the onset of earnings season. Hence, we expect stock-specific activity to remain in focus.

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Our constructive bias is further validated by the following observations:

• In tandem with historical evidence, the index has followed the template of price and time-wise correction.
• The Nifty 50 bounced after a 16% and 4 consecutive months' decline, which typically triggers a strong recovery in subsequent two quarters with average returns of 30%.
• Historically, a median geopolitical correction to the tune of 11% offers a portfolio-building opportunity that garnered 27% in the next 3-6 months.
• The Bank Nifty continues to respect its post-COVID rhythm, arresting intermediate corrections within the 20% threshold.
• Market breadth has seen significant improvement, with the current reading of % stocks trading above 50- and 200-days SMA jumping to 52% and 33% compared to last month's reading of 15%.

Key Monitorable

• Inflation print
• Further decline in Crude, US, Dollar Index
• Start of Q4 earning season

Stocks To Buy This Week

Dharmesh Shah of ICICI Securities recommends buying Reliance Industries Ltd (RIL) and Titan Company Ltd.

• Buy Reliance Industries in the range of ₹1,320-1,350, with a share price target of ₹1,480 and a stop loss of ₹1,237.
• Buy Titan in the range of ₹4,376-4,496, with a share price target of ₹4,900 and a stop loss of ₹4,098.