Stock recommendations for 7 October from MarketSmith India

Finally, the Sensex closed 583 points, or 0.72%, higher at 81,790.12, while the Nifty 50 ended at 25,077.65, up 183 points, or 0.74%.

Two stock recommendations by MarketSmith India for 7 October

Buy: One 97 Communications Ltd (current price: ₹ 1,225)

• Why it is recommended: Strong brand & market recognition, large user & merchant network, multiple revenue streams, scaling benefits & network effects, and diversification across fintech verticals
• Key metrics: P/E: 245, 52-week high: ₹ 1,296.60, volume: ₹ 559.93 crore
• Technical analysis: Reclaimed its 21-DMA
• Risk factors: Regulatory & compliance risk, high capital expenditure/investment burden, technology & cyber security risk, execution risk in scaling new verticals, and dependence on partnerships & third-party tie-ups
• Buy at: ₹ 1,220–1,235
• Target price: ₹1,410 in two to three months
• Stop loss: ₹1,140

Buy: Fedbank Financial Services Ltd (current price: ₹162.50)

• Why it is recommended: Strong parent linkage & brand support, diversified, secured retail loan portfolio & high growth trajectory
• Key metrics: P/E: 25.18; 52-week high: ₹164; volume: ₹47.90 crore
• Technical analysis: Ascending triangle Breakout
• Risk factors: Limited seasoning in non-gold segments & portfolio risk, leverage pressure & capital adequacy constraints
• Buy at: ₹160–163
• Target price: ₹190 in two to three months

How the Nifty 50 performed on 6 October

Indian equity markets demonstrated robust strength today, extending the recent rally to close firmly above key psychological levels. Nifty 50 posted a strong gain of approximately 0.70% to settle comfortably past 25,000 at 25,067.60, while Sensex mirrored the momentum with a comparable 0.70% surge to close around 81,772.

The session was overwhelmingly dominated by the heavyweights, with bank stocks and IT firms leading the charge, fuelled by positive Q2 loan and business updates from key lenders and firm global cues. The broader market participation remained strong, reflecting institutional buying, with the advance-decline ratio showing a favorable tilt toward gainers.

Nifty 50 extended its rebound, showing early signs of short-term stabilization after a corrective phase. The index reclaimed its 100-, a key development that reflects renewed buying interest and a potential shift in near-term sentiment. The 14-period RSI has rebounded from oversold territory, indicating easing selling pressure and a possible pause in the recent downtrend.

Additionally, Nifty’s move above its previous downward-sloping trendline suggests that selling momentum is subsiding, lending credence to a consolidation phase. However, the MACD remains in negative territory, highlighting that the broader structure still lacks clear bullish confirmation and that recovery attempts may face intermittent resistance.

According to O'Neil’s methodology of market direction, the market status has been downgraded to an "Uptrend Under Pressure" as Nifty breached its "50-DMA" and the "distribution day count" is at one.

Nifty 50 extended its gain, closing above both its 100-DMA and the prevailing downward sloping trendline, a development that underscores near-term strength. On the upside, the next key hurdle is at 24,500, a critical resistance area. A decisive close above this band would likely reinforce bullish momentum and pave the way for an extension toward 25,650–25,700 in the coming sessions. Conversely, a close below 24,600 could trigger renewed selling pressure, exposing the index to downside targets around 24,500–24,450.

How did Nifty Bank perform?

On Monday, Nifty Bank opened on a positive note and maintained its upward momentum throughout the session. It formed a bullish candle with a higher-high and higher-low structure on the daily chart. It successfully reclaiming its 100-DMA, reflecting renewed strength.

The index opened at 55,834.70, reached an intraday high of 56,164.20, and touched a low of 55,727.25 before closing at 56,104.85. This sustained upward movement indicates improving investor confidence and a strengthening market sentiment within the banking sector, supported by continued buying interest and positive momentum across major banking constituents.

Momentum indicators reinforce the prevailing trend. The RSI has increased to 63 from 58, indicating improving upward momentum. Simultaneously, the MACD stays above the central line with a positive crossover, reflecting sustained bullish bias. This technical configuration signals strengthening short-term sentiment.

However, the broader market structure still lacks firm confirmation. Therefore, traders are advised to maintain a selective approach and exercise caution when considering aggressive positioning in the current environment.

On the technical front, Nifty Bank has regained its 100-DMA, signaling renewed strength and improving market sentiment within the banking space. Sustained buying interest could potentially drive the index toward its previous peak near 57,628, which is approximately 3% above the current level.

However, investors should remain cautious as profit booking at elevated levels cannot be ruled out after the recent recovery. On the downside, the index may find interim support around 55,200, followed by a subsequent cushion near 54,000, which are likely to act as key reference points for short-term trend assessment.

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.

Trade name: William O’Neil India Pvt. Ltd.

Sebi Registration No.: INH000015543

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.