Speaking to ET Now, Dharmesh Shah, market strategist from ICICI Direct said, “Definitely, the market started the journey of the new year on a very positive note and we believe this positivity should continue going forward. Looking at the Bank Nifty, we have been trading in the range of 59,000 to 60,000 and finally witnessed a breakout above 60,000. Considering the way Bank Nifty is constituted and the performance of stocks like HDFC Bank or Kotak, it looks like Bank Nifty should move higher. We are looking at a target of around 61,000 for the Bank Nifty for the month of January, with strong support placed at around 58,500.”
On the broader Nifty, Shah highlighted the consolidation that has set the stage for higher levels. “For the last two months, we have seen good consolidation in the range of 25,700 to 26,200. Finally, we have managed to hold above 26,200. The strong base formation over the past two months suggests that the market is looking at higher targets. We expect Nifty to head towards 26,700 for the month of January, keeping a stop loss of around 25,700. The 25,700 level, being the 50-week EMA, has held for a long time, and the trend lines joining the lows of October, November, and December indicate strong buying demand from the lower end of the channel.”
When asked about stock-specific recommendations amid the rising market momentum, Shah said, “If the market breaks out above 26,300, large-cap stocks should relatively outperform. Among large caps, we prefer the capital goods sector. With the budget approaching and the sector having seen little action for a long time, the technical setup indicates that capital goods should do well. Within the sector, L&T remains our top pick. After six weeks of consolidation, the stock shows relative outperformance in this corrective phase. We look for a target of around 4,500 for L&T, keeping a stop loss of 3,800.”
Shah also highlighted select Adani Group stocks for potential gains. “Adani Port looks promising in terms of both momentum and technical setups. Over the last one-and-a-half years, the stock has been consolidating around 1,400 levels. A cup-and-handle pattern seems to be forming, and we believe Adani Port should witness a breakout above 1,500, with a target of around 1,675 and a stop loss of 1,375. So, L&T and Adani Port remain our top picks at current market prices.”
As markets enter January with strong technical setups, investors are closely watching both sectoral performance and broader index movements to gauge whether the early-year optimism can sustain itself in the coming weeks.
