DIWALI CRACKERS: Brokerages bet on ICICI Bank on account of its fast improving lending book, NPA clean-up
Information technology, pharma and banking stocks are analysts' picks for the Diwali Muhurat trading on Wednesday, which marks the beginning of a new Hindu accounting year, Samvat 2075.
The stocks were picked on the basis of the strong earnings visibility over the next one year, reasonable valuations, sectors which are set to turn the current macro situation to their advantage and high-quality management with healthy corporate governance.
One stock on which all brokerages are betting is ICICI Bank on account of its fast-improving lending book, major clean-up of stressed assets and solid retail franchise. Sector-wise, analysts see most support in IT and pharma sectors while Bank Nifty is also getting some attention due to ICICI Bank, Axis Bank and HDFC Bank.
"From the technical evidence, we are expecting a rally towards 10600–10700 in Nifty in the coming months. Thus long positions can be taken on declines towards 10150 with a stop-loss of 9999 on a closing basis," Jay Purohit, technical and derivates analyst at Centrum Broking, said in a report.
So will Sensex and Nifty remain in positive zone for the Muharat trading or trade in the red zone like last year.
"Current volatility should be used as an opportunity to accumulate fundamentally strong stocks for the long term. We remain positive on domestic consumption, IT and select private sector banks. We have a cautious view on NBFCs, pharma, auto and oil marketing companies," Prabhudas Lilladher said in a report.
Diwali sale for this year has begun and the market offers a wide range of choice for the investors. Several stocks are trading at 52-week lows and some are at an even five-year low.
"The market is unlikely to see any significant re-rating from the current levels and valuation multiples are likely to persist or even decrease from the current levels. However, such market conditions provide great opportunity to accumulate high-quality stocks at reasonable valuations which in normalised conditions are perceived to be expensive that too with limited upside," Reliance Securities said in a report.
"A special live trading session shall be held on Wednesday on account of Muhurat trading on Diwali," National Stock Exchange (NSE) said in a circular. "All trades executed in this session would result in settlement obligations," it said.
According to NSE and BSE circulars, with respect to Diwali Muhurat trading in equity segment, block deal session will be held from 5 pm to 5:15 pm and the pre-open session will be conducted from 5:15 pm to 5:23 pm. The normal stock market will open at 5:30 pm and will close at 6:40 pm followed by a post-closing cooling period of 10 minutes from 6:40 pm to 6:50 pm. In the pre-open session, the order entry period will be from 5:15 pm to 5:23 pm while order matching and determination of equilibrium prices will take place from 5:23 pm to 5:30 pm.
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