Stocks to buy or sell: Dharmesh Shah of ICICI Securities suggests buying Kotak Bank tomorrow – 17 Feb 2025

Stock Market News: The main domestic stock indices, Nifty 50 and Sensex, declined on Friday as investors expressed concerns about the potential consequences of US President Donald Trump’s intentions to implement reciprocal tariffs, which analysts believe could adversely affect India more than its Asian counterparts.

Trump intends to impose reciprocal tariffs on all nations that levy taxes on US imports. Nonetheless, the enforcement of these tariffs is expected to be postponed, allowing global stocks to experience a relief rally.

Indian Prime Minister Narendra Modi met with Trump on Thursday and proposed discussions on reducing tariffs, increasing purchases of US oil and gas, acquiring combat aircraft, and making trade concessions.

However, this did little to stabilise the markets at home. The Nifty 50 declined by 0.44% to 22,929.25, while the Sensex decreased by 0.26% to 75,939.21. Both the Nifty 50 and Sensex have experienced a drop of roughly 2.5% this week, marking their worst performance in 2025 thus far.

Vinod Nair, Head of Research at Geojit Financial Services, pointed out that a cautious attitude remains prevalent among investors as corporate earnings are considerably below market projections at the beginning of the year, particularly for mid- and small-cap stocks. The subdued earnings trend, depreciation of the Indian Rupee, and external factors such as tariffs are likely to maintain weak sentiment in the short term, potentially leading to further outflows from Foreign Institutional Investors (FIIs).

Market Outlook by Dharmesh Shah, Vice President, ICICI Securities

1. Equity benchmark snapped two weeks winning streak and declined 2.7% during the week to settle at 22,929, amid rise in volatility. Global markets outperformed as Dax and Hang Seng jumped 3% and 7%, respectively. Sectorally, all major indices ended in red weighed down by realty, consumption and PSU. The weekly price action, resulted into a sizable bear candle carrying lower high-low, indicating downward bias.

2. The Nifty 50 is currently hovering around lower band of past five weeks consolidation range 23,800-22,800. Going ahead, 22,800 would be key level to watch, as a decisive close below 22,800 would lead to extended correction towards 22,200 (as it is 80% retracement of election low to Sept-24 rally, 21,281-26,277). Meanwhile, to pause the ongoing down move, Nifty 50 need to sustain above 23,300 on a closing basis.

3. Key point to highlight is that, at current juncture, % of stocks above 50 SMA and 200 SMA within Nifty 500 Universe have entered the bearish extreme zone of 14, indicating pessimism at its peak. Historically, such an extreme pessimism led to abating downward momentum in subsequent weeks, eventually paving the way for a durable bottom. Hence, focus should be on accumulating quality stocks on dips backed by strong earnings.

4. On the broader market front, past two decades data suggest, in a bull market phase, Nifty 50 midcap and small cap have a seen maximum correction of 21% and 30%, respectively. In current scenario, with 19% and 22% correction already in place in Midcap and small cap, possibility of another 3%-5% correction cannot be ruled out.

5. In the current corrective phase, where there is lot of pessimism in the market, we are witnessing some silver linings which would provide impetus for pullback rally in coming weeks, details listed below:

A) The US Dollar index has cooled off and now on the verge of breakdown from recent consolidation 110-107. Further decline would provide cushion to equities

B) Ease-off in geopolitical worries would bring some stability in equity markets

C) The developed markets like DJIA, DAX are trading just a percent away from their lifetime highs. Buoyancy in global equity markets bodes well for pullback in domestic market

Stock To Buy This Week – Dharmesh Shah

Dharmesh Shah of ICICI Securities recommends buying Kotak Mahindra Bank this week.

Buy Kotak Mahindra Bank in the range of ₹1,890-1,955 for the target of ₹2120 with a stop loss of ₹1,789.

Disclaimer: The Research Analyst or his relatives or I-Sec do not have actual/beneficial ownership of 1% or more securities of the subject company, at the end of 14/02/2025 or have no other financial interest and do not have any material conflict of interest.

The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.