Nifty Eyes 24,500 Target: Dharmesh Shah Names M&M and L&T as Top Buys

The Indian equity markets are showing signs of significant bullish momentum following a strong weekly close. According to Dharmesh Shah, VP and Head of Technical Research at ICICI Direct, the Nifty 50 is poised to break through recent resistance levels to reach new heights in the coming week.

Nifty Outlook: 24,500 Target and the Role of Crude Oil

The Nifty 50 has recently been struggling to cross the 24,200 mark, which sits near its 100-day exponential moving average (EMA). However, Shah anticipates that this resistance will soon give way, driving the index toward a target of 24,500.

A primary catalyst for this expected rally is the trend in crude oil prices. With crude heading toward a target range of $68–$69 per barrel, combined with a stable rupee and declining commodity prices, the macroeconomic environment is shifting in favor of Indian equities. Shah advises investors to view any price corrections toward the 23,800 support level as strategic buying opportunities rather than reasons for panic.

Bank Nifty Momentum and Sectoral Breadth

The banking sector remains a cornerstone of the market's strength. Bank Nifty, which holds a 35% weightage in the Nifty 50, recently closed above the critical 58,000 mark. Shah has set a near-term target of 59,300 for the index, noting that strong support is established at 57,500. The return of Foreign Institutional Investor (FII) interest in banking stocks is providing the necessary technical conviction for this move.

Furthermore, the rally appears to be broad-based rather than concentrated in a few heavyweights. A scan of Nifty 50 constituents across the banking, capital goods, and auto sectors reveals that a majority of stocks are signaling a potential upside of 5% to 10% from current levels.

Top Stock Picks: Mahindra & Mahindra and L&T

For investors looking for specific opportunities, Shah has identified two high-conviction stocks with clear risk-reward profiles:

1. Mahindra & Mahindra (M&M): In the auto sector, M&M stands out due to structural tailwinds, including falling crude oil prices and improved margins from commodity corrections. After a recent retracement to a key Fibonacci level and the 52-week EMA, the stock shows strong base formation.

  • Target: ₹3,400
  • Stop Loss: ₹2,900

2. Larsen & Toubro (L&T): As a pick in the capital goods space, L&T is positioned for a sharp reversal as geopolitical tensions in the Middle East stabilize. The stock has recently achieved a technically significant breakout by closing above the ₹4,250 range.

  • Target: ₹4,500
  • Stop Loss: ₹4,050

Key Takeaways

  • Market Direction: Nifty is expected to target 24,500, supported by falling crude oil prices and a strong support floor at 23,800.
  • Banking Strength: Bank Nifty has broken the 58,000 barrier, with a projected upside target of 59,300.
  • Top Recommendations: M&M (Auto) and L&T (Capital Goods) are identified as the most promising individual stock picks for the upcoming week.