Stocks to buy: Two stock recommendations from MarketSmith India for 31 January
However, due to the monthly F&O expiry, the index witnessed some volatility and closed near the day’s high at 23,249.50. As a result, the index formed a bullish candle with a higher-high and higher-low price structure. Barring FMCG, all major sectoral indices closed higher. The broader market participated in the rally as the advance-decline ratio is inclined toward advancers as the ratio stands at 6:1.
From a technical perspective, the index once again moved to its earlier consolidation zone of 22,976–23,426 and the approaching 21-EMA. The 14-day, relative strength index (RSI), continues to trend upward and is currently positioned around 46. However, RSI is still trending in the bearish zone on the daily chart. Another technical indicator, moving average convergence/divergence (MACD), has turned above positive crossover but is still trending below its central line.
According to O’Neil’s methodology of market direction, we are changing the market status to a rally attempt. Tuesday’s session was considered day one of an attempted rally as Nifty closed in the green. Nifty has not breached the correction low of 22,787 since day one. Hence, today’s action qualifies as day three of an attempted rally. So, we are changing the market status to a rally attempt from a downtrend. From here, we would prefer to see a follow-through day before shifting the market to a confirmed uptrend. On the flip side, if Nifty breaches its recent low of 22,787, the market will move back to a downtrend.
The index managed to close in the green on the third consecutive day. However, it is still trading below its 21-DMA and a downward sloping trendline connecting closing points of 13 December, 2024 and 2 January, 2025, which are currently placed around 23,350.
Moving forward, sustainable trading in the range of 23,350–23,400 may lead the index toward 23,600–23,700, followed by 24,000–24,200 in the next few weeks. However, failure to cross and hold above 23,400 may remain traded in the range-bound zone of 23,400–23,000.
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How Nifty Bank performed
On Thursday, Bank Nifty opened on a muted note (40 points higher) and remained in positive territory for the majority of the trading session. The index formed three consecutive bullish candles and closed near the day’s high, reclaiming its 21-DMA. The index opened at 49,206.20, moved in 49,426.20–49,031 range, and closed at 49,311.95, marking a gain of 0.30%.
The 14-day, RSI, has moved upward and is currently positioned around 47 on the daily chart. Another trend-following indicator, MACD, shows a positive crossover on the daily charts but is still trending below the central line.
According to O’Neil’s methodology of market direction, we downgraded the market status to an Uptrend Under Pressure on Monday as Nifty Bank breached its current support level of 48,300 with an elevation in distribution days. Moving ahead, the recent low, i.e., 47,898.35, is a key level to watch as we may shift the market status to a Downtrend, when the index breaches it.
The index reclaimed its 21-DMA on Thursday and closed above it. Moving ahead, the 21-DMA is a key level to watch from a short-term perspective. Sustainable trading above the 21-DMA may lead the index toward 50,000–50,200 in the coming few days. However, on the flip side, a breach below the 21-DMA could result in a lacklustre trend.
Also Read: Dixon’s cautionary tale: The faster they grow, the harder they fall
Stocks recommendations by MarketSmith India:
Bharti Airtel Ltd: Current market price ₹ 1,640.75| Buy range ₹ 1,610–1,635| Profit goal ₹ 1,850| Stop loss ₹ 1,558| Timeframe 3–4 months
Avanti Feeds: Current market price ₹ 696 | Buy range ₹ 674–700| Profit goal ₹ 880| Stop loss ₹ 630| Timeframe 2–3 months
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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