The Indian stock market experienced a pullback on Friday, breaking its six-session winning streak as global sentiment weighed on investor confidence. The Nifty 50 closed 37 points lower at 26,178, while the BSE Sensex shed 264 points to finish at 85,571.
The Nifty Bank was among the worst performers, dropping 541 points to end at 53,834. Despite this downturn, broader market indices showed some resilience, finishing marginally positive, with an advance-decline ratio of 0.99:1.
This indicates that while frontline indices were under pressure, several mid-cap and small-cap stocks still had underlying strength.
Surge in Market Volumes
One notable observation from Friday’s trading session was the spike in cash market volumes on the NSE, which surged by 36.2% compared to the previous day.
This uptick in trading activity can largely be attributed to Nifty rebalancing, where stocks are added or removed from the index, prompting institutional investors to adjust their portfolios. Such events often lead to higher-than-normal trading volumes as large fund houses realign their positions to mirror the index composition.
Market Outlook: Buy on Dips
Despite the dip in key indices, experts remain bullish on the Indian stock market’s overall trajectory. Sumeet Bagadia, Executive Director at Choice Broking, maintains a positive outlook, suggesting that the correction is healthy and presents a buying opportunity.
According to Bagadia, the Nifty 50 index remains on track to touch 26,900 in the coming weeks, as long as it holds crucial support at the 25,800 level. He recommends that investors adopt a “buy-on-dips” approach, as the market is expected to rebound from these levels in the near future.
Stocks to Watch
For investors looking to capitalize on the market’s current movements, Bagadia has highlighted three stocks that offer strong potential for growth: Eicher Motors, Pidilite Industries, and Cipla. Robust technical indicators back these stocks, and Bagadia believes they are well-positioned to deliver gains in the coming sessions.
Eicher Motors: Poised for an Upside Breakout
Eicher Motors is currently trading at ₹5062.60 and has shown signs of a sustainable upside bounce over the last two weeks. According to Bagadia, the stock has been consolidating in the ₹4900-5000 range for several months, and it now appears ready to break out of this pattern.
A decisive move above the ₹5000 mark would signal a strong upward momentum, with a target price of ₹5300 in sight. Bagadia recommends buying the stock with a stop loss set at ₹4900 to manage risk effectively.
With its strong fundamentals and promising technical setup, Eicher Motors is likely to attract investor interest in the short to medium term. The stock has shown resilience during market corrections, and a breakout could propel it to new highs, making it a compelling option for investors looking for opportunities in the automobile sector.
Pidilite Industries: Positive Momentum Supported by Technicals
Pidilite Industries, a market leader in adhesives and construction chemicals, is another stock on Bagadia’s buy list. The stock closed at ₹3363.45 on Friday and has demonstrated remarkable strength in recent sessions. After consolidating in the ₹3200-3300 range, Pidilite is now showing signs of a breakout, with its next target pegged at ₹3555.
The stock is trading comfortably above its 20-day, 50-day, and 200-day Exponential Moving Averages (EMAs), signaling a bullish trend. Bagadia points out that Pidilite’s technical indicators, such as the rising Relative Strength Index (RSI), currently at 65, support a positive outlook for the stock.
Investors are advised to consider entering the stock at current levels, with a stop loss set at ₹3250 to safeguard against any downside risk. The company’s robust market position and positive technical setup make it an attractive investment for those looking to gain exposure to the industrial and consumer goods sectors.
Cipla: Targeting Further Upside
Pharmaceutical giant Cipla rounds out Bagadia’s top picks for Monday. The stock is currently trading at ₹1672.50 and has been in an uptrend since hitting support around ₹1600, near its 50-day EMA. The stock is positioned above its key moving averages, indicating a strong technical setup for further gains.
Cipla faces resistance at the ₹1699 level, but a breakthrough at this point, supported by strong trading volumes, could push the stock towards its target price of ₹1777. The stock’s RSI, currently at 60, suggests there is still room for further upward movement.
Investors who have already entered the stock at lower levels are advised to trail their stop losses near ₹1616 to lock in profits as the stock approaches its target. Cipla offers a promising opportunity with a strong risk-reward ratio for those considering fresh investments.
