Investor Advisory: Analyst Suggests Strategic Holdings in Bandhan Bank, Metropolis Healthcare, and CESC

Indian Benchmark Indices Open Lower Amid Geopolitical Uncertainty

The Indian stock market opened lower on Tuesday, May 26, as investors adopted a cautious stance following fresh US military strikes in southern Iran. The operations, described by Washington as defensive, raised concerns about a potential escalation in the conflict, even as the U.S. and Iran continue negotiations aimed at ending the three-month-long war.

As a result, the Nifty 50 slipped 0.11% to 24,004.1, while the Sensex declined 0.35% to 76,224.14 in early trade as of 9:15 IST. This pullback comes a day after both benchmark indices touched two-week highs on optimism that the US and Iran were nearing a peace agreement.

The renewed geopolitical uncertainty pushed Brent crude futures up nearly 2% to around $98 per barrel, tempering investor expectations of an imminent breakthrough and weighing on market sentiment.

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Market Outlook

According to Sagar Doshi, Senior Vice President- Research at Nuvama Professional Clients Group, the Nifty 50 has broken out from its 2-week-long consolidation, with a target of 500 points from the breakout zone of 23,750. This implies an additional 250 points upside even after Monday's strong up move. Lower oil prices and positive advancements on the geopolitical front are fuelling this tailwind.

The level of 23,760, which acted as resistance for 2 weeks, has now turned into support.

Bank Nifty Continues Outperformance

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Bank Nifty continued its outperformance, with the index up 3.5% in the last week compared to a 1.5% gain on Nifty 50. Given the ongoing strength and sloping trendline breakout over the past 1 month, the index is likely to head further higher towards 56,300/56,850, with Monday's 54,500 acting as intermediate support.

Stocks to Buy on Tuesday

Sagar Doshi of Nuvama has recommended three stocks to buy on Tuesday:

These stocks have shown strong momentum and are expected to continue their upward trend.

Individual Stock Analysis

• Bandhan Bank Ltd has broken out of a bullish cup-and-handle pattern in late April, and a successful retest has been completed. The stock has now added more legs to march towards a fresh swing high of 212.
• Metropolis Healthcare Ltd has broken out of its 4-year consolidation zone on the weekly charts, indicating a structural trend reversal. The stock has sustained above its 200 DMA, while demand is re-emerging around the 500-510 (buy on dip) zone.
• CESC has been in strong hands after an 18-month trendline breakout last month. The stock appears to have resumed momentum once again, given the underlying strength of this huge breakout.