Stock market recap: Indian equities resumed their downward march on Tuesday, 28 July, with the benchmarks ending slightly lower amid mixed global cues.
The Sensex closed 70 points, or 0.09%, lower at 76,765.92, while the Nifty 50 ended at 23,985.35, down 11 points, or 0.04%.
The mid and small-cap segments ended mixed. The Nifty Midcap 100 index climbed 0.08%, while the Smallcap 100 index declined 0.22%.
The stock market ended lower amid profit-taking after strong gains in the previous session, as uncertainties over the West Asia conflict continued to weigh on sentiment. The US and Iran have halted strikes, and reports suggest some diplomatic efforts to end the conflict are on. Crude oil prices fell further to $85 per barrel.
Two stock recommendations by MarketSmith India:
Buy: Nestle India Ltd (current price: ₹1,490)
- Why it’s recommended: Strong portfolio of trusted brands, market leader in key categories, strong pricing power, consistent revenue growth, healthy profit margins, strong cash flow generation, debt-free balance sheet, extensive distribution network, beneficiary of premiumization trend, continuous product innovation, strong rural expansion potential, healthy return ratios, long-term FMCG growth tailwinds, consistent dividend track record, and strong parent company support.
- Key metrics: P/E: 74.28, 52-week high: ₹1,510.00, volume: ₹770.23 crore
- Technical analysis: Flat base pattern breakout
- Risk factors: Premium valuation multiples, rising raw material costs, margin pressure from inflation, intense FMCG competition, slower consumer demand, dependence on key brands, regulatory changes in the food sector, changing consumer preferences, supply chain disruptions, high advertising expenses, limited pricing flexibility, product quality or recall risks, currency fluctuation on imports, earnings growth moderation, and market share pressure from rivals.
- Buy: ₹1,475–1,497
- Target price: ₹1,650 in two to three months
- Stop loss: ₹1,420
Buy: TVS Motor Co. Ltd (current price: ₹3,990)
- Why it’s recommended: Leading two-wheeler manufacturer, strong domestic market share, growing export presence, strong brand portfolio, beneficiary of premiumization trend, expanding electric vehicle portfolio, strong R&D capabilities, healthy operating margins, strong distribution network, increasing scooter market share, global expansion opportunities, healthy balance sheet, strong cash flow generation, consistent earnings growth, and long-term mobility demand tailwinds.
- Key metrics: P/E: 50.06, 52-week high: ₹4,001.40, volume: ₹772.26 crore
- Technical analysis: Consolidation base breakout
- Risk factors: Dependence on two-wheeler demand, intense competition in auto sector, raw material price volatility, slowdown in rural demand, EV transition execution risk, margin pressure from competition, export demand fluctuations, regulatory changes in emission norms, supply chain disruptions, currency fluctuation impact, rising marketing and distribution costs, economic slowdown affecting sales, dependence on consumer financing, technology disruption risks, and valuation risk after strong re-rating.
- Buy at: ₹3,950–4,010
- Target price: ₹5,000 in two to three months
- Stop loss: ₹3,550
Nifty 50 performance on 28 July
Indian equity markets ended Tuesday's session on a subdued note after a range-bound day, with Nifty 50 slipping 10.60 points (-0.04%) to close at 23,985.35. Sensex also finished marginally lower as investors turned cautious ahead of key global cues and continued to assess the ongoing Q1 earnings season.
Market breadth remained weak amid flat headline indices, with the advance-decline ratio favouring bears, with 1,160 stocks advancing, 2,133 stocks declining, and 114 remaining unchanged, indicating broader selling pressure beneath the surface.
Sectoral performance was mixed, with Nifty IT (+3.32%) emerging as the standout outperformer, supported by buying in large-cap technology stocks, while Realty (+2.17%), Consumer Durables (+1.08%), and Auto (+0.69%) also ended higher. On the flip side, FMCG (-1.38%), PSU Bank (-0.96%), Metal (-0.61%), and Private Bank (-0.40%) weighed on sentiment.
Nifty 50 staged a strong rebound after bouncing from its rising trendline support, reaffirming the underlying strength of the prevailing uptrend. Notably, the index reclaimed its 50- and 100-DMAs, reversing the breakdown in the previous session and suggesting that the recent weakness may have been a false breakdown rather than the start of a sustained corrective phase.
Momentum indicators also suggest an improvement in market sentiment. The Relative Strength Index (RSI) has turned higher and is hovering around the neutral 50 mark, indicating that bearish momentum is easing while buying interest is gradually returning. Meanwhile, the MACD remains in negative territory but is showing signs of stabilization, with the histogram contracting and the indicator attempting to turn higher, suggesting that downside momentum is fading and a positive crossover could emerge if buying momentum sustains.
The staged a strong rebound, reclaiming its 50- and 100-DMA with the rising trendline, indicating an improvement in near-term market sentiment. However, sustaining these levels will be crucial to reinforce the ongoing recovery. On the downside, a decisive break below 23,600 could trigger renewed selling pressure, exposing the index to 23,300, and further downside risk toward 23,000. On the upside, the index needs to decisively reclaim and sustain above 24,400 to signal a meaningful revival in bullish momentum.
Such a move would also confirm a breakout from the recent consolidation range, strengthening the overall technical structure and increasing the probability of an advance toward 24,500–24,600.
How did Nifty Bank perform?
Nifty Bank opened on a negative note at 56,883.55, compared with the previous close of approximately 57,087.20. The index initially recovered to an intraday high of 57,054.20, but profit-booking emerged near higher levels and dragged it to a low of 56,672.40. It eventually closed at 56,755.60, down 331.60 points or 0.58%, near the lower half of the session’s range.
The index is trading below its 21- and 200-DMA, indicating sustained near-term supply although it remains above the 50- and 100-DMA. The latest candle reflects a failed intraday recovery rather than aggressive selling pressure, while the recent price structure suggests a lower-high formation following rejection from 58,000.
The RSI stands at 45.95, below both the neutral 50 level and its average of 52.31, indicating weakening momentum without entering oversold territory. The indicator’s recent sequence of lower highs confirms that buying strength has moderated. The MACD line is below its signal line, while the histogram has moved deeper into negative territory at approximately –214.77, confirming a bearish crossover and increasing downside momentum.
However, because the index continues to hold above the rising 50-DMA, the broader structure has not turned decisively bearish. A recovery in RSI above 50 and contraction in the negative MACD histogram would be required to signal renewed buying interest.
Immediate support is placed at 56,670, corresponding to the session’s low, followed by the 50-DMA near 56,413. A decisive close below this zone could extend the correction toward the 100-DMA around 55,768. On the upside, 57,050 is the first resistance, followed by the 10- and 200-DMA cluster at 57,390–57,430 and the 21-DMA near 57,599.
The near-term bias remains cautious while the index stays below this moving-average cluster. Improving banking liquidity and selective strength following better asset-quality trends in some lenders provide support. However, uncertainty ahead of the RBI’s policy assessment and mixed banking earnings may sustain volatility.
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.