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

Religare Broking's Ajit Mishra continues to maintain a 'buy on dips' strategy and recommends focusing on opportunities with a favourable risk-reward setup

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Stock market outlook

Markets traded sideways on Wednesday and ended with a mild downtick, taking a breather after the recent surge. After a quiet start, the Nifty moved within a narrow range for most of the session and eventually settled near the day’s low at 25,046.15. On the sectoral front, most sectors, barring IT, closed lower, with realty and auto among the top losers. The broader indices also lost nearly half a per cent each, mirroring the overall sectoral weakness.

 

With the earnings season underway, focus now shifts to TCS's quarterly results, scheduled for Thursday, October 9. As IT remains one of the lagging sectors, market participants will closely watch how sentiment evolves post its numbers.

 

On the index front, indications point toward further consolidation, albeit with a positive bias. We continue to maintain a "buy on dips" strategy and recommend focusing on opportunities with a favourable risk-reward setup, particularly within sectors showing consistent relative strength, such as auto, metals, and PSUs, while remaining selective in others.

Stocks Recommendations

The Federal Bank | LTP: ₹202.61| Recommendation: Buy | Target: ₹216| Stop-loss: ₹195

Federal Bank exhibits a bullish technical structure, with prices decisively breaching key moving averages accompanied by a notable surge in volume, indicating renewed accumulation. The recent breakout follows an extended consolidation phase, reinforcing upward momentum. A double-bottom formation on the daily chart further supports the likelihood of a trend reversal in favour of buyers. Traders may consider initiating long positions while maintaining disciplined risk management near established support levels.  

HPCL | LTP: ₹457.30| Recommendation: Buy | Target: ₹485| Stop-loss: ₹440

HPCL continues to display solid bullish momentum, trading firmly above its 50-, 100-, and 200-day exponential moving averages. The formation of successive higher highs and higher lows, along with rising volumes, reinforces the short-term uptrend. A clear breakout above the prior swing high further strengthens market confidence and signals scope for sustained upside. Traders may look to initiate long positions within well-defined risk parameters to benefit from the prevailing bullish tone and potential follow-through buying.

Vedanta | LTP: ₹472.70| Recommendation: Buy | Target: ₹505| Stop-loss: ₹455

The metal counter continues to exhibit strength, with VEDL moving in tandem. The stock has been consistently finding support at lower levels after brief bouts of profit-taking. Recently, it broke out of a resistance zone that had acted as a barrier multiple times. The stock now trades above the key moving averages, aligned in a bullish sequence, reinforcing the strength of the ongoing trend. The broader bias remains firmly positive, with an improving trend structure and sentiment favouring continued gains. Traders may consider initiating long positions within the defined range.  

 

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