NSE Nfty 50, Bank Nifty, IT sector, stock marketNSE Nfty 50, Bank Nifty, IT sector, stock marketOn technical charts, Nifty has formed a strong support base in the range of 14,400-14,600. Image: Reuters

NSE Nifty 50 is expected to challenge its lifetime high of 15,431 points and soar to as high as 16,400 by September, brokerage ICICI Direct said in a note, reiterating the positive stance on the domestic share market benchmark. The brokerage firm believes that the formation of higher peak and trough coupled with multi-sector participation may lead Nifty towards revised target of 16,400 over the next quarter, led by BFSI, consumption, automobiles and infrastructure stocks.

On technical charts, Nifty has formed a strong support base in the range of 14,400-14,600. The formation of higher peak and trough on the larger degree chart suggested elevated buying demand that has made the brokerage firm confident of revising the support base at 14,600. “We expect the Nifty to hold 14600 as it is a 61.8 per cent retracement of current up move (15,251-14,151), 20 weeks EMA is placed at 14,500, and past three week’s low at 14,592,” it said.

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ICICI Direct doesn’t expect the index to breach the key support threshold of 14600, and has advised investors to capitalise dips to accumulate quality large-cap and midcap stocks. With a decline in daily COVID-19 cases in India, Nifty 50 index is just 100 points away from its record high of 15,431.

As for the Bank Nifty index, the weekly bar chart signals resumption of primary uptrend. Analysts expect it to gradually head towards 38,600 levels in the medium term. In line with its view, the Bank Nifty index maintained the rhythm of not correcting more than 20 per cent as witnessed since March 2020. Recently, it rebounded after correcting 19 per cent from its all-time high of 37,708, which provides favourable risk-reward set up for the next leg of major up move in coming months.

Key figures in a nutshell


– Revised Target: 16,400 by September 2021
– All-time high: 15,431
– Nifty current level: 15,301 (close of Wednesday, 26 May 2021)
– Strong support: 14,600

Bank Nifty

– Target: 38,600
– All-time high: 37,708
– Last correction from all-time high: 19%

Sectors and stocks in focus

Pharma and Chemicals: The Healthcare index extended its uptrend in May led by strong price structure. Technically, Divis Laboratories, Cipla, Caplin Point Laboratories and Solara Active Pharma Sciences may outperform. While Abbott India, Indoco Remedies and Dishman Carbogen provide favourable risk-reward setup.

Consumption: The brokerage firm highlighted that stocks such as Asian Paints, Astral Poly, Nilkamal, Kajaria Ceramics are set to outperform while Bata India, Titan Company, Trent, Kansai Nerolac Paints, Godrej Consumer Products provide a favourable risk reward setup.

IT: The IT index witnessed a breather after a rally in May. Within the sector, ICICI direct Research sees Wipro, Persistent Systems, Cyient, Birlasoft to outperform while Tata Consultancy Services (TCS), Infosys, Teamlease stocks provide a favourable risk reward setup.

Capital goods: Capital goods index snapped a two-month breather and made a sharp rebound after testing its 2018-19 peaks which has now turned as support. Stocks such as SKF India, KennaMetal India, Orient Refractories and Siemens stocks are set to outperform while L&T, ACE, NRB Bearings, Ador Welding shares provide a favourable risk reward setup.

Metal: The brokerage firm expects metal sector outperformance to taper down while keeping the overall positive outlook intact. “We expect JSW Steel, Tata Metaliks, Graphite India and Jindal Stainless to outperform while Tata Steel, SAIL, Kalyani Steel provide favourable risk reward setup,” it said.

Auto: ICICI direct Research expects commercial vehicle, tractor space to extend outperformance while 2-wheeler space provides favourable risk-reward setup. Technically Bajaj-Auto, Tata Motors, Mahindra & Mahindra, Balkrishna Industries and Philips Carbon may outperform while Ahok Leyland, ESCORTS, Asahi India, Pricol stocks offer a favourable risk-reward setup.

Realty and Infra: The Infra space has undergone decent correction in April and May 2021. The brokerage firm sees outperformance in stocks such as Ambuja Cements, Oberoi Realty, HG Infra. “While PNC Infratech, Sanghvi Movers, India Cements and Mahindra Logistics provide a favourable risk reward setup,” it added.

(The stock recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)

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