Will Nifty's winning streak light up Muhurat trading? Check strategy and stock picks for festive gains

Indian equities are entering Samvat 2083 on a strong note after staging their biggest weekly rally in nearly six years, with analysts identifying opportunities in banking, automobiles, pharmaceuticals and select largecap stocks ahead of the special Diwali Muhurat trading session on Sunday, November 8.

The Nifty surged over 8% in the past week, extending the benchmarks' winning streak to seven consecutive sessions. This was supported by easing crude oil prices, strong foreign institutional buying, improving corporate earnings and a recovery in the rupee.

The turnaround comes after a difficult Samvat 2082, when the Nifty declined nearly 11%. The Sensex lost 11.8% over the same period, as geopolitical tensions, elevated crude prices and foreign investor outflows weighed on Indian equities.

Despite the recent recovery, market experts are advising investors to remain selective and avoid aggressive buying during the one-hour ceremonial trading session.

Muhurat Trading strategy

Ravi Singh, Chief Research Officer at Master Capital Services, believes Muhurat trading should be approached with a long-term investment strategy, focusing on fundamentally strong companies with healthy earnings visibility and reasonable valuations.

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"Muhurat trading should be approached with a quality-first, long-term investment strategy rather than short-term speculation," Singh said. He cautioned that the special session is often characterised by relatively thin trading volumes and sentiment-driven price movements.

Investors should avoid chasing sharp intraday gains, use limit orders and deploy their capital gradually, he added.

Ponmudi R, CEO of Enrich Money, said the sustainability of the rally would depend on continued moderation in crude oil prices, sustained foreign institutional buying and the market's ability to consolidate recent gains.

The decline in crude prices has been particularly important for India, which depends heavily on imported oil. Lower energy prices could ease inflationary pressures, reduce the import bill and improve corporate profitability.

However, Ponmudi warned that elevated momentum indicators, global uncertainty and the sharp selloff in US technology and artificial intelligence-related stocks could create fresh volatility.

He also pointed to geopolitical developments involving the US and Iran as an important risk for crude oil prices and investor sentiment.

Five technical Muhurat picks for Samvat 2083

A technical stock-picking list from Kotak Neo for Samvat 2083 identifies Bajaj Finance, ICICI Bank, JSW Steel, Bharat Electronics and Reliance Industries as buying opportunities, with potential upside of 11% to 29% from their first suggested entry prices.

Bajaj Finance has a suggested entry price of Rs 939, with a second buying level at Rs 850. The target is Rs 1,200, implying potential upside of 27.8% from the first entry price, while the stop-loss is placed at Rs 770. ICICI Bank has a buying range of Rs 1,300-1,398, with a target of Rs 1,800 and stop-loss at Rs 1,200. The target represents a potential gain of 28.8% from the first entry level of Rs 1,398.

For JSW Steel, the suggested entry levels are Rs 1,246 and Rs 1,200, with a target of Rs 1,475 and stop-loss at Rs 1,150. The first entry level offers potential upside of 18.4%. Bharat Electronics has been identified with entry levels of Rs 370 and Rs 350, a target of Rs 410 and a stop-loss at Rs 340. The implied upside from Rs 370 is approximately 10.8%.

Reliance Industries is another stock on the list, with entry levels of Rs 1,165 and Rs 1,100, a target of Rs 1,400 and a stop-loss at Rs 1,050. The target implies a potential return of 20.2% from the first entry price.

Can the Diwali rally continue?

The sharp market rebound has improved the near-term technical outlook, although analysts believe the pace of the recovery could invite profit-booking.

According to ICICI Securities, companies that have reported results so far in Q2 have delivered more than 20% growth in both revenue and profit after tax. The brokerage said profit growth among midcap and smallcap companies has exceeded 30% year-on-year, reinforcing expectations of an earnings-led recovery.

Still, the recent market rally has been dominated by largecap stocks, particularly banks and index heavyweights. Investors will be watching whether gains spread to smaller companies in the coming weeks.

Technical view

Sudeep Shah, Vice President and Head of Technical and Derivatives Research at SBI Securities, expects the Nifty's earlier resistance zone of 24,750-24,800 to act as an important support area. According to Shah, the short-term bullish outlook remains intact as long as the index sustains above 24,750, leaving room for another upward move after a period of consolidation.

The index closed Friday at 25,030.35, placing it above this support zone ahead of Muhurat trading.

For investors entering Samvat 2083, analysts see opportunities in fundamentally strong companies following the market correction. However, the speed of the recent recovery makes disciplined entry prices and risk management particularly important.

Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclosures here.

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