Nifty50 might be down 6 percent from the highs of 15431 but ICICIdirect feels that every dip is a buying opportunity and investors can look at select buys from the large & midcap space based on technicals.
Despite anxiety around surging COVID-19 cases across India, the index managed to hold the key support threshold of 14200 on multiple occasions, the report highlighted.
Stocks that ICICIdirect list as "bargain buys" include Axis Bank, IndusInd Bank, L&T, BHEL, PNC Infra, TVS Motors, TCS, Indoco Remedies, Lupin, Adani Ports, VIP Industries, and Indian Hotels etc.
On every dip, elevated buying demand emerged after approaching maturity of price and time-wise correction. The index logged a resolute breakout from the downward sloping channel of the past two months, indicating the conclusion of corrective bias that augurs well for the next leg of up move.
“We expect the index to resolve higher and gradually retest lifetime highs of 15430 in coming months. In the process, stock-specific action would prevail amid the progression of Q4 FY21 result season. Thus, dips should be capitalised to accumulate quality largecap and midcaps,” said the report.
Broader market indices showed resilience by forming a higher base above 50 days EMA. ICICIdirect expects the Nifty midcap, smallcap indices to regain upward momentum and relatively outperform the benchmark.
History suggests that since March 2020, the Nifty has maintained a rhythm of not correcting more than 9% and time-wise not correcting for more than two to three consecutive weeks.
From the past two month’s 8 percent corrective move hauled the Nifty in the vicinity of the lower band of the falling channel. The current elevated buying demand confirms that the aforementioned rhythm has been maintained.
“Hence, any dip from here on should be capitalised on to accumulate quality large and midcaps as we expect stock-specific action to continue amid ongoing Q4FY21 result season,” the report added.
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