Stocks to buy: Two stock recommendations from MarketSmith India for 7 February
Source: Live Mint
Nifty 50 on 6 February
Nifty 50 closed 93 points lower at 23,603.35 on Thursday, a day ahead of the outcome of the Reserve Bank of India’s (RBI) monetary policy meeting, where expectations point to a 25 basis points repo rate cut to 6.25%. The index had opened on a positive note at 23,761.10 but quickly slipped into negative territory, closing just above 23,600. This price action formed a bearish candle with a lower-high, lower-low structure on the daily chart. Barring Pharma and IT, all major sectoral indices ended flat to lower. The advance-decline ratio settled at 1:1.
Nifty managed to hold above its 50- and 100-EMA (exponential moving average) but faced resistance at its 50-DMA (daily moving average) and a downward-sloping trendline connecting September and December 2024 highs. The 14-day RSI (Relative Strength Index), remains sideways at 53, while MACD (Moving average convergence/divergence), another technical indicator, has turned positive but is still trending below its central line.
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According to O’Neil’s methodology of market direction, on Tuesday, Nifty staged a follow-through day as it advanced more than 1.5% on higher volume than Monday’s session. Hence, we have upgraded the market status to a Confirmed Uptrend. We may downgrade the status to an Uptrend Under Pressure if the distribution day count increases and Nifty breaches its key support level.
The index has struggled to break above its 50-DMA (23,750–23,800) in recent sessions and closed lower for the second straight day on Thursday. Going forward, this level remains a key resistance. A sustained move above it could push the index toward its 200-DMA at 24,000–24,200. However, failure to reclaim the 50-DMA may lead to a subdued trading session. On the downside, immediate support is at 23,400, with the next cushion at 23,200.
How Nifty Bank performed
Nifty Bank saw a volatile session on Thursday, opening with a mild gap-up but slipping into negative territory during the first half of the day. However, buying interest from lower levels in the second half helped the index recover and close in the green for the third consecutive session. It formed another Doji candle.
The index opened at 50,468.35 on Thursday, traded within a range of 50,553.35 to 50,149.80, and closed at 50,382.10, posting a modest gain of 0.08%.
On the technical front, the 14-day RSI continues to improve and is currently around 57, indicating strengthening momentum. Meanwhile, the MACD has formed a positive crossover and is approaching its central line.
According to O’Neil’s methodology of market direction, we upgraded the market status to a Confirm Uptrend on Tuesday this week, as Bank Nifty crossed its recent rally high of 49,650.60. Overall, the market breadth is improving. Leading stocks in this space are progressing well. On the flip side, we may downgrade the status to an Uptrend Under Pressure if the distribution day count increases and the index breaches its key support level.
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The price structure in the banking sector is improving, with the index trending above its 200-EMA. However, it may face multiple resistances on the upside in the range of 50,700–51,400. If the current buying momentum continues, the index could potentially reach 50,800–51,000, followed by 51,400 in the coming days. On the downside, the immediate support is placed around 49,500, followed by 49,000.
Stocks recommended by MarketSmith India:
● Lupin Ltd: Current market price ₹ 2,185.35 | Buy range ₹ 2,140–2,200 | Profit goal ₹ 2,650 | Stop loss ₹ 1,970 | Timeframe 2–3 Months
Also read | How equity investors can ride the post-Budget wave
● Sarda Energy & Minerals Ltd: Current market price ₹ 459.65 | Buy range ₹ 445-464 | Profit goal ₹ 570 | Stop loss ₹ 417 | 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.
