Stock recommendations for 22 January from MarketSmith India

The Sensex fell 271 points, or 0.33%, to end at 81,909.63, while the Nifty 50 settled at 25,157.50, down 75 points, or 0.30%. The BSE Midcap and Smallcap indices lost 1% and 0.80%, respectively.

Investors lost about ₹2 trillion in a single session as the market capitalization of BSE-listed firms dropped to ₹454 trillion from ₹456 trillion in the previous session

Two stock recommendations for 22 January by MarketSmith India

Buy: Tata Steel Ltd (current price: ₹184)

• Why it’s recommended: Strong Tata Group backing, large-scale integrated steel operations, diversified geographic presence across India and Europe, long-term domestic infrastructure demand, an improving product mix with a higher share of value-added steel, and a continued focus on cost efficiency and deleveraging.
• Key metrics: P/E: 32.50, 52-week high: ₹191, volume: ₹642.70 crore
• Technical analysis: 21-DMA bounce
• Risk factors: Cyclical steel price volatility, high exposure to global demand trends, raw material cost fluctuations, profitability risks in European operations, high capex and debt sensitivity, and regulatory and environmental compliance costs.
• Buy at: ₹182–185
• Target price: ₹203 in two to three months
• Stop loss: ₹176

Buy: Dalmia Bharat Ltd (current price: ₹2,232)

• Why it’s recommended: Strong presence in eastern and southern India, cost-efficient operations and margins, a clear focus on capacity expansion, improving balance sheet strength, and an emphasis on sustainability with a low carbon footprint.
• Key metrics: P/E: 36.59, 52-week high: ₹2,496.30, volume: ₹194.94 crore
• Technical analysis: trendline breakout and retest
• Risk factors: Cyclical demand linked to infrastructure and real estate, high dependence on power and fuel costs, intense competition within the cement industry, pricing pressure during weak demand phases, and execution risks associated with new capacity additions.
• Buy at: ₹2,225–2,245
• Target price: ₹2,460 in two to three months
• Stop loss: ₹2,125

How the Nifty 50 performed on 21 January

On Tuesday, Indian equities closed lower, with benchmarks struggling to sustain intraday recoveries amid broad-based selling pressure. Nifty 50 ended the session at 25,157.5, down 75 points or 0.3%, after oscillating sharply within a wide range of 24,920–25,301.

The index slipped below its previous close of 25,232, reflecting cautious investor sentiment, while Sensex finished modestly in the red. Market breadth was decisively weak, as declines outpaced advances (2,141 stocks declined versus 1,078 advances, with 81 unchanged), underscoring broad risk aversion across the market.

On the sectoral front, financials and consumption-oriented pockets bore the brunt of selling. Nifty Financial Services, private banks, PSU banks, FMCG, and Consumer Durables declined between 0.6-1.7%, weighing heavily on the benchmarks. Pharma and IT also closed lower, reflecting selective profit-taking. In contrast, Metals and Oil & Gas provided limited support, aided by mild strength in global commodity prices.

From a technical perspective, Nifty 50 witnessed a highly volatile session, swinging sharply within a broad intraday range before closing at 25,157.5, marginally above its 200-DMA, which remains a critical long-term trend gauge. Price action on the daily chart formed a long-bodied bearish candle, reflecting sustained selling pressure after repeated failures to hold higher levels. Momentum indicators also echo this cautious tone. The RSI has declined toward the lower 40s, slipping below its signal line and indicating deteriorating bullish strength, though it has not yet entered deeply oversold territory. Meanwhile, the MACD has turned negative, with the histogram expanding downward, signaling a bearish crossover and strengthening downside momentum in the near term.

According to O’Neil’s methodology of market direction, the market shifted to a Downtrend after Nifty breached its 100-DMA, indicating weakening intermediate momentum. A Rally Attempt would emerge if the index closes positive or in the upper half of its daily range and holds above that low for three consecutive sessions. A subsequent follow-through day (FTD) would be required to confirm a transition back to an Uptrend, signalling renewed institutional participation.

Nifty traded in a broad and volatile range during the session but managed to close above its 200-DMA, that continues to provide an important cushion for the broader trend, even as near-term momentum shows signs of weakening. On the downside, immediate support is placed in 24,900–25,000, while a deeper corrective phase, if it unfolds, is likely to find buying interest closer to 24,600. On the upside, the index is expected to remain range-bound and volatile, with movements likely to be confined within 24,900–25,600 in the near term, as participants await clearer directional cues from macro developments and global markets.

How did Nifty Bank perform?

Nifty Bank opened on a negative note and failed to sustain higher levels during the session. After opening near 59,149, the index attempted an early recovery but faced selling pressure, registering an intraday high of 59,447. As the day progressed, sustained profit booking at elevated levels dragged the index lower, leading to an intraday low of 58,278. Despite some late-hour stabilization, the index finally closed at 58,800, ending the session with a loss of about one percent, or roughly 604 points).

The price action reflects short-term distribution after a recent rally, indicating cautious sentiment among traders. Overall, the session highlighted supply dominance near record highs, while volatility picked up meaningfully, suggesting near-term consolidation ahead of the next directional move.

From an indicator perspective, RSI (14) is placed near 41, slipping below its average and reflecting weakening momentum without yet entering oversold territory. This suggests cooling strength rather than outright trend reversal. The MACD remains above the zero line but is showing a bearish crossover with a declining histogram, highlighting short-term loss of upside momentum. Together, these indicators point toward consolidation or mild corrective bias in the near term.

The stock index ended the trading session in negative territory, decisively breaking below its 50-DMA amid prevailing bearish sentiment. This downturn also saw the index pierce through its immediate support level, signaling weakening buyer conviction. If the ongoing selling momentum persists, it could propel the index further downward to retest the 100-DMA, currently situated around 57,640, a critical juncture that might offer some stabilization if defended.

Conversely, a short-term technical rebound remains possible, but it would require robust and sustained buying, along with a significant improvement in the broader market. Only then could the index muster the strength to approach and potentially overcome its nearest resistance barrier near 60,000, fostering a more optimistic outlook amid current volatility. Investors should closely monitor volume trends and sector breadth for early signs of reversal.

MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. It offers tools and resources to help investors make informed decisions based on the CAN SLIM methodology, founded by legendary investor William J. O'Neil. You can access a 10-day free trial by registering on its website.

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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.