Buy Axis Bank, HDFC, DLF stocks for gains; follow buy on dips till Nifty holds 17800, Bank Nifty looks bullish

Buy Axis Bank, HDFC, DLF stocks for gains; follow buy on dips till Nifty holds 17800, Bank Nifty looks bullish

By Ajit Mishra

Bulls remained under control for the fourth successive week as markets edged higher and gained over a percent amid mixed signals last week. The beginning of the week was upbeat, however, volatility on the global front triggered profit taking in the middle. The benchmark indices, NSE Nifty 50 and BSE Sensex, regained strength in the final session and settled around the week’s high to close at 18,349.7 and 61,795 levels, respectively, on Friday. The IT pack turned out to be the top gainer among the sectoral pack closely followed by banking and metal. However, the disappointing performance of broader indices, as both midcap and smallcap lost in the range of 0.5%-1%, continue to weigh on sentiment.

Apart from the domestic factors, the recovery in the US markets has been playing a critical role in strengthening the up move however their intermediate choppiness causes profit taking too. And, while we’re gradually inching towards the record high, selective participation from the index majors and underperformance of the smallcap pack may continue to weigh on the sentiment. Amid all, we’ve highlighted the possible move and key levels to look at in the Nifty and Banking index along with a list of stocks to keep watch on for potential trading opportunities.

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Nifty: After the decline from 18,091 to 16,747 level in September 2022, Nifty has been seeing a steady recovery for the last one and a half months. It has retested the January 2022 high i.e. 18,350.95 in the passing week and now we’re eyeing a new record high. We recommend continuing with the “buy on dips” approach till Nifty manages to hold 17,800. Based on the projection technique, it has the potential to test 18,700+ levels.

Bank Nifty: In line with the Nifty index, the banking index too witnessed a dip in September 2022 after retesting its previous record high level at 41,829.60 levels. However, it has emerged stronger and made a new record high at 42,345 last week. The overall buoyancy in the private banking space combined with strong participation from the PSU pack indicates the prevailing trend to continue. We believe 40,800-41,600 would provide the cushion in case of any dip. On the higher side, it can test 42,900-44,200 levels. A word of caution on the PSU banking basket though and suggest preferring only the fundamentally sound counters.

Stocks to watch

Stocks like Axis Bank, Coforge, Dalmai Bharat, Dixon, DLF, HDFC, Pidilite, Mindtree and LTI are strongly placed on charts and are likely to perform well this week.

(Ajit Mishra, VP – Research, Religare Broking. Views expressed are the author’s own.)