ICICI Securities Analyst Recommends Buying Tata Motors PV and BHEL Stocks

Stock Market Sees Sharp Increase as Oil Prices Decline

The domestic benchmark indices opened sharply higher on Monday, 25 May, following a decline in Brent crude prices below $100 per barrel for the first time in over two weeks. This boost in investor sentiment came as a result of growing optimism over a potential agreement to end the Iran conflict, which could reopen the strategically important Strait of Hormuz.

The decline in oil prices came as US President Donald Trump announced on Saturday that Washington and Iran had largely negotiated a framework for a peace deal that could restore shipping through the Strait. The Strait is a key route that previously handled nearly one-fifth of global oil and LNG trade. Investors largely shrugged off Trump's subsequent comments on Sunday that cautioned against expecting an immediate breakthrough.

As a result of the improved risk appetite, Brent crude fell 5.6% to $97.8 per barrel, while broader Asian markets advanced 1.3%. Back home, the Nifty 50 climbed 0.94% to 23,941.85, while the BSE Sensex gained 1.02% to 76,194.32 as of 9:45 IST.

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Market Outlook

According to Dharmesh Shah, Vice President of ICICI Securities, the Indian equity benchmarks recovered a portion of the previous week's losses as renewed optimism surrounding potential peace negotiations fueled the momentum in the market. The Nifty 50 gained 0.3% at 23,719, with Midcaps continuing to outperform by gaining 1.4%. Sectorally, IT and Realty outshone, while consumption and PSU underwent profit booking.

The index started the week on a positive note but lacked strength at higher levels, resulting in the index confining within last week's bear candle. Consequently, weekly price action formed a small bull candle with a higher low, indicating a pause in corrective bias.

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Over the past seven sessions, the index has been trading in a narrow range of 23,800-23,200. This tight-range price behavior occurred while navigating geopolitical concerns, crude price volatility, shifting bond yields, and fluctuations in the USDINR pair. Ultimately, this prolonged sideways movement signifies a healthy consolidation process, effectively establishing a strong base for the next major leg upward.

Going ahead, we expect the index to resolve out of the upper band of consolidation placed at 23,800, which coincides with the 20-day EMA, and resume upward momentum that can drive Nifty 50 towards 24,400 in the coming weeks. In the process, we expect bouts of volatility to remain elevated ahead of monthly expiry and ongoing earning season.

Key Recommendations

Dharmesh Shah of ICICI Securities recommends buying Tata Motors Passenger Vehicles and Bharat Heavy Electricals Ltd (BHEL). He recommends buying Tata Motors Passenger Vehicles in the range of ₹353-364 with a target price of ₹393 and a stop loss of ₹337. He also recommends buying BHEL in the range of ₹400-409 with a target price of ₹436 and a stop loss of ₹388.