The Nifty, a key equity index in India, is currently undergoing a period of healthy consolidation. After reaching an all-time high of 19,991.85 in July of this year, the index has undergone a correction of approximately 3%.

This consolidation phase follows a significant rally of nearly 19% from its lowest point in March.

ICICI Direct, a financial services company, has set a target of 20,700 for the Nifty by Diwali, which falls in mid-November this year. Additionally, they have reiterated their Nifty target of 21,400 by March 2024.

According to a research report by ICICI Direct, the Nifty is exhibiting a pattern similar to what was observed in the years 2014 and 2017. In these years, after substantial consolidation breakouts, intermediate corrections in the range of 5-7% consistently presented buying opportunities to capitalize on a larger structural bull run. The report notes a key support level at 18,600.

“We maintain our Nifty target of 21,400 by March 2024, with an interim target of 20,700 by Diwali 2023,” stated the ICICI Direct report.

Meanwhile, the company anticipates a broad-based rally led by sectors such as Banking, Financial Services, and Insurance (BFSI), Information Technology (IT), and Telecommunications. They project that sectors like Metal, Infrastructure, Power, and Public Sector Undertaking (PSU) Banks will likely generate additional returns.

Analyzing the technical charts for the Nifty Bank, ICICI Direct identifies a sustained upward trend and asserts that leadership remains intact. They expect the Nifty Bank to gradually reach around 48,600 and recommend a “buy on dips” strategy. A strong support level for the Bank Nifty is observed at 42,000.

In the BFSI sector, ICICI Direct’s favored picks include HDFC Bank, State Bank of India (SBI), IndusInd Bank, Federal Bank, Indian Bank, L&T Finance, and LIC Housing Finance.

Among Public Sector Undertaking (PSU) stocks, ICICI Direct’s top selections consist of Hindustan Aeronautics, NTPC, Engineers India, Hindustan Copper, PFC, IRCON International, and BEML.

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