Dharmesh Shah Picks PFC for July 28: Strong Buy Signal from ICICI Securities
Stock market today: Stock markets experienced a decline for the second day in a row on Friday, with the Sensex dropping 721 points due to substantial selling pressure in financial, IT, and oil & gas sectors amidst continued foreign fund outflows.
The Sensex fell by 721.08 points, or 0.88%, closing at a level not seen in over a month at 81,463.09. During the day, it briefly dipped by 786.48 points, or 0.95%, hitting a low of 81,397.69.
The Nifty 50 also fell, decreasing by 225.10 points, or 0.90%, to reach a monthly low of 24,837. Analysts noted that a lackluster performance in Asian and European markets further impacted investor sentiment.
According to market analysts, Indian markets are expected to be affected by the ongoing Q1 FY26 earnings season in the coming week, as many prominent companies are set to announce their results. Investors will closely monitor management discussions for insights regarding margin forecasts, sector developments, and more.
Dharmesh Shah from ICICI Securities anticipates that the Nifty 50 will continue to be in a corrective phase as long as it continues to create lower highs and lows, with significant support established at 24,500, a level that has been successfully defended on several occasions even in the face of geopolitical concerns observed during May and June.
Market Outlook by Dharmesh Shah, Vice President, ICICI Securities
Equity benchmarks pared intra-week gains that resulted into extended losses over fourth week in a row amid absence of US-India bilateral tariff agreement. Nifty 50 underperformed the global peers and settled the week at 24837, down 0.5%. Broader market seen profit booking as Nifty midcap and small cap lost 2% and 4%, respectively. IT, Realty, FMCG weighed on market sentiment while Financials, pharma relatively outperformed. The weekly price action formed a small bear candle with upper wick carrying lower high-low, indicating extended correction.
Contrary to our expectation index extended losses and closed below 50 days EMA which has been majorly held since April coupled with 2 months rising trend line breakdown. Going ahead, we expect bias to remain corrective as long as Nifty 50 maintains lower high-low formation wherein strong support is placed at 24,500 which has been held on multiple occasions despite geopolitical worries seen during May and June.
Amidst ongoing corrective phase only silver lining is that the Bank nifty is showing relative outperformance and trading within 2% of its All-Time range. Further, any positive development on earnings as well as on bilateral trade agreement would dictate the further course of action which will
India VIX has corrected over sixth consecutive week and now bounced after approaching cyclical lows of 10, indicating participants anxiety at lowest level amid absence of key trigger. However, in the coming weeks, we expect rise in volatility tracking U.S. Fed policy coupled with monthly expiry and domestic IIP print.
Structurally, over past 20 sessions index has retraced 61.80% of preceding 11 sessions 5% up move. The slower pace of retracement, highlights robust price structure. Hence, focus should be on accumulating quality stocks backed by strong earnings.
Key Monitorable:
a. US Fed Policy Outcome.
b. Development on US-India bilateral trade deal.
c. Weakness in US Dollar index and Crude oil prices.
d. India VIX is bouncing from extreme oversold territory.
On the broader market front, breach of past three weeks low on Midcap and small cap indices indicates corrective bias wherein possibility of mean revision towards its short-term averages cannot be ruled out. In addition to that, the market breadth has seen deterioration as % of stocks above 50 days SMA have declined to 44% from last week’s reading of 68%.
Stocks To Buy This Week – Dharmesh Shah
Dharmesh Shah of ICICI Securities recommends buying Power Finance Corporation Ltd (PFC) shares this week.
Buy PFC shares in the range of ₹415-425. He has PFC share price target of ₹478 with a stop loss of ₹388.
Disclaimer: The Research Analyst or his relatives or I-Sec do not have actual/beneficial ownership of 1% or more securities of the subject company, at the end of 25/07/2025 or have no other financial interest and do not have any material conflict of interest.
