Stock recommendations for 4 February from MarketSmith India

This massive breakout was primarily fueled by the landmark India-US trade deal, where Washington reduced reciprocal tariffs on Indian goods to 18%. This development drastically eased long-standing trade uncertainties, triggering aggressive short-covering and renewed foreign institutional interest. The rally was exceptionally broad-based, as reflected in the stellar advance-decline ratio, with gainers vastly outnumbering losers across the board. Export-oriented sectors took centre stage; Textiles, Gems & Jewellery, and Speciality Chemicals saw multiple stocks hitting 20% upper circuits.

Two stock recommendations by MarketSmith India:

Buy: eClerx Services Limited (current price: ₹4,925)

Why it’s recommended: Strong niche presence in data analytics and process management, high-margin business model with consistent cash generation, debt-free balance sheet, long-term contracts with global clients, healthy return ratios (ROE and ROCE), stable promoter holding.

Key metrics: P/E: 34.02 | 52-week high: ₹4,995.00 | Volume: ₹65.58 crore

Technical analysis: Double-bottom breakout

Risk factors: Revenue concentration from a limited set of large clients, high dependence on BFSI and e-commerce sectors, currency volatility impacting earnings, intense competition in the analytics/KPO space, talent retention and wage inflation risks, and slower growth during global economic downturns.

Buy: ₹4,900-4,950

Target price: ₹5,500 in two to three months

Stop loss: ₹4,630

Buy: S.J.S. Enterprises Ltd (current price: ₹1,741)

Why it’s recommended: Leader in decorative aesthetics solutions for the automotive and appliances industry, strong product portfolio across decals, badges, overlays, and in-mould labels, consistent revenue and profit growth with industry outperformance, high margins and healthy ROCE/ROE ratios, reduced or low debt with improving financial health, export presence and diversification into new products and segments, premium clientele and long-term OEM partnerships.

Key metrics: P/E:33.47 | 52-week high: ₹1,869.00 | Volume: ₹38.93 crore

Technical analysis: cup-with-handle breakout

Risk factors: Valuation appears high versus intrinsic value with rich multiples, earnings dependent on auto industry cyclicality, promoters holding relatively low and slightly declining, working capital pressure observed in past reported data, competition in the auto ancillaries and aesthetics space, exposure to raw material and commodity price volatility, and social and labour risks in operations.

Buy at: ₹1,725-1,760

Target price: ₹1,980 in two to three months

Stop loss: ₹1,620

Nifty 50: How the benchmark index performed on 3 February

On Monday, Indian equities ended the session on a strong note, with benchmarks extending their recent uptrend amid broad-based buying. The Nifty 50 surged 2.55% to close at 25,727.55, adding 639 points over the previous close of 25,088.40, while the Sensex also posted sharp gains in tandem. The rally was underpinned by robust participation across sectors, as reflected in a healthy advance-decline ratio: 2,694 stocks advanced, 534 declined, and 90 remained unchanged, indicating a clear risk-on sentiment across the broader market.

On the sectoral front, cyclicals and rate-sensitive pockets led the move. The Nifty Financial Services, PSU Banks, Private Banks, and Auto indices gained between 2.5% and 3.2%, supported by expectations of steady credit growth and stable macro conditions. Realty emerged as a top performer, gaining nearly 5%, while metals and healthcare also closed firmly higher. Defensive sectors like FMCG lagged with modest gains, suggesting a tilt toward growth-oriented themes.

From a technical perspective, the Nifty 50 has shown a meaningful improvement in price structure after a volatile phase. The index recently reclaimed both its 100- and 200-DMA in quick succession, signalling a restoration of medium-term trend strength and renewed institutional participation. This recovery momentum pushed the index towards the upper end of its broader trading band, where it briefly approached its all-time high zone before facing selling pressure, indicating supply emerging at elevated levels. Momentum indicators are stabilizing.

The RSI has rebounded from lower levels and is currently holding in the neutral-to-positive zone, suggesting improving momentum without entering overheated territory. Meanwhile, the MACD, though still below its signal line earlier, is showing signs of flattening with a nascent positive crossover attempt, pointing to a potential continuation of the recovery if follow-through buying persists.

According to O’Neil’s methodology of market direction, the Nifty 50 remains in a downtrend. From a tactical standpoint, traders should remain selective and prioritize risk management.

The index has delivered a decisive close above its 100- and 200-DMA in a single move, underscoring a sharp improvement in near- to medium-term sentiment. However, following the recent euphoric single-day rally, the market is likely to enter a phase of consolidation as it digests the gains and attempts to form a healthy base at higher levels. Such stabilization would be constructive for the sustainability of the ongoing uptrend.

On the downside, 25,400-25,100 is expected to act as an immediate cushion, where buying interest may emerge on declines. On the upside, 25,800-26,000 represents a strong hurdle for the index, given the supply seen near higher levels. A sustained close above 26,000 would be a key technical trigger and could open the door for further upside toward 26,300-26,400 in the near term.

How did the Nifty Bank perform yesterday?

The Nifty Bank opened on a strong positive note, registering a sharp gap-up at the start of the session and maintaining positive momentum throughout the day. The index witnessed sustained buying interest, which propelled it to an intraday high of 61,764 before some profit-booking emerged at higher levels. Despite easing off from the peak, the index closed firmly at 60,041, marking a robust gain of 1,422 points, or 2.43%. The rally was broad-based, with buying interest visible across all major banking constituents. Positive global cues, coupled with improved risk sentiment, supported the upward movement. Overall, the day’s price action reflected renewed investor confidence in the banking sector and strong institutional participation.

Momentum indicators present a cautiously constructive picture. The RSI is placed around 56, indicating a recovery from lower levels and reflecting improving momentum, though it remains below the strong bullish threshold. Meanwhile, the MACD histogram has turned positive, with a visible bullish crossover, suggesting that downside momentum is waning and a short-term trend reversal may be unfolding. This improving oscillator setup, coupled with price stability above key short-term averages, hints at a gradual strengthening of the underlying trend. However, sustained momentum confirmation will depend on follow-through buying in the coming sessions, especially near overhead resistance levels.

Immediate support for the index is placed near 59,300, followed by a stronger support base around 58,100, which aligns with the 100-DMA. On the upside, resistance is seen near 60,500, while a key supply zone exists in 61,700-62,000, where selling pressure was observed earlier. Sustaining above 60,000 and a decisive breakout beyond 61,000-61,500 could pave the way for further upside. In the near term, the index is expected to remain volatile but retain a positive bias, with corrective dips likely to attract buying interest.

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.