Further consolidation ahead for Nifty? Here's today's outlook and top picks

Ajit Mishra of Religare Broking has recommended buying the shares of Dalmia Bharat, Jindal Steel, and LIC Housing Finance today

Market View

Markets remained under pressure for yet another session and ended lower amid weak cues. The Nifty opened in the red due to subdued global signals and heightened geopolitical risk aversion. It struggled to hold crucial support levels in the initial hours and slipped close to the 24,900 mark. Although some bargain hunting in select heavyweight stocks across sectors led to a mid-session rebound, the recovery lacked follow-through, and the Nifty index eventually closed at 25,157.50, down by 0.30 per cent. Sectoral performance remained largely negative, with banking, financials and realty among the top laggards, while metal and energy stocks managed marginal gains. Broader market indices, including midcaps and smallcaps, also ended lower, reflecting broad-based risk-off positioning and cautious participation. 

The persistent weakness was driven by ongoing global trade and geopolitical concerns, including renewed tariff-related fears that weighed on risk assets ahead of the US President’s speech at Davos. A sharp depreciation in the Indian rupee to fresh lows further dampened sentiment, especially in the absence of any meaningful positive surprise from the earnings season. Continued foreign institutional selling added to the pressure, keeping overall risk appetite subdued and market activity largely stock-specific. 

Technically, the Nifty has closed near its long-term moving average, the 200 DEMA around the 25,150 level, after briefly breaching it intraday. While weakness in the currency and a cautious global backdrop may continue to weigh on sentiment, oversold conditions in select heavyweight stocks could offer some short-term relief. On the downside, the 24,750–24,900 zone is seen as the next key support, while any rebound is likely to face resistance in the 25,300–25,450 range. In the current environment, a cautious stance is advisable, with preference for hedged positions and balanced exposure on both sides.

Stocks to Buy - Recommendations by Ajit Mishra

Dalmia Bharat | LTP: ₹ 2,232.40| Recommendation: Buy | Target: ₹ 2,380| Stop-loss: ₹ 2,160

Dalmia Bharat is offering a renewed buying opportunity after a decisive reversal from the neckline of its earlier consolidation base. The stock has formed a classic cup-and-handle pattern and has registered a fresh breakout above a key multi-month resistance level. This breakout is supported by a notable expansion in volumes, reflecting strong buying participation. Additionally, the stock has reclaimed its short- to long-term moving average cluster and is sustaining above these levels, which are now expected to act as immediate support. Given these technical developments, a resumption of the broader uptrend appears likely. Investors may consider accumulating the stock within the indicated range.

Jindal Steel | LTP: ₹ 1,045.80| Recommendation: Buy | Target: ₹ 1,100| Stop-loss: ₹ 1,020

Jindal Steel is displaying an improving technical structure as prices rebound from a key moving average support and reclaim the short-term trend line. The recent price action suggests a developing reversal from corrective lows, supported by rising volumes that indicate renewed accumulation. Overall, the strengthening structure and supportive momentum signals point toward a continuation of the bullish recovery in the coming sessions, offering a favorable risk-reward setup. Investors may consider accumulating the stock to benefit from potential trend continuation.

LIC Housing Finance | LTP: ₹ 506| Recommendation: Sell Jan Futures | Target: ₹ 478| Stop-loss: ₹520

LIC Housing Finance continues to exhibit a weak price structure, characterised by a consistent lower-top, lower-bottom formation. The stock has slipped below its long-term average, the 200-week EMA, following a brief consolidation near this level. It has also breached an important intermediate support zone, forming a strong bearish candle accompanied by high volumes, which signals increasing downside pressure. With the bearish structure firmly in place, the stock is likely to extend its decline and retest its March 2025 low. Traders may consider initiating short positions in LICHSGFIN futures within the specified range. 

 

(Disclaimer: Ajit Mishra is senior vice president of research at Religare Broking. Views expressed are his own.)