Stock market recap: Indian equities traded in a narrow range on 6 August as positive domestic macroeconomic signals offset persistent foreign fund outflows and weak global cues.
Sentiment was underpinned by the Reserve Bank of India's (RBI) decision to raise its FY27 GDP growth forecast to 6.7% while lowering its inflation projection to 5%. Softer Brent crude prices, which slipped towards $78 a barrel, also supported buying in heavyweight sectors such as oil and gas, pharmaceuticals and infrastructure.
However, gains remained capped by continued foreign institutional investor (FII) selling, with FIIs offloading ₹943.42 crore in the cash market, even as domestic institutional investors (DIIs) bought shares worth ₹2,883.17 crore. Weakness across Asian markets, including Japan's Nikkei and South Korea's Kospi, added to investor caution.
Two stock recommendations by MarketSmith India:
Buy: Shriram Finance Ltd (current price: ₹1,138)
- Why it’s recommended: Market leader in vehicle finance, diversified retail lending portfolio, strong rural and semi-urban presence, healthy loan growth potential, strong customer franchise, improving asset quality, healthy net interest margins, strong collection efficiency, diversified funding sources, beneficiary of rising credit demand, strong cash flow generation, experienced management team, healthy return ratios, scalable business model, and attractive valuation potential.
- Key metrics: P/E: 23.34, 52-week high: ₹1,153.70, volume: ₹1,424.94 crore
- Technical analysis: Consolidation base pattern breakout
- Risk factors: Rising NPAs during downturns, dependence on interest rate cycle, margin pressure from funding costs, credit risk in retail lending, regulatory risks for NBFCs, intense competition in lending, economic slowdown affecting collections, asset-liability mismatch risk, higher provisioning requirements, dependence on commercial vehicle demand, liquidity and refinancing risks, rural demand volatility, technology and cybersecurity risks, earnings volatility in weak credit cycles, and valuation risk after strong re-rating.
- Buy: ₹1,127–1,144
- Target price: ₹1,290 in two to three months
- Stop loss: ₹1,060
Buy: Ujjivan Small Finance Bank Ltd (current price: ₹71.28)
- Why it’s recommended: Strong retail-focused banking model, leading microfinance franchise, growing secured loan portfolio, healthy deposit growth, improving CASA ratio, strong asset quality trends, beneficiary of financial inclusion, expanding branch network, healthy capital adequacy, diversified retail lending, digital banking initiatives, improving operational efficiency, strong collection efficiency, scalable business model, and attractive valuation potential.
- Key metrics: P/E: 14.95, 52-week high: ₹73.29, volume: ₹114.81 crore
- Technical analysis: Consolidation base pattern breakout
- Risk factors: High microfinance exposure, asset quality deterioration risk, credit cost volatility, interest rate cycle impact, margin pressure from deposit costs, regulatory risks for SFBs, economic slowdown affecting collections, geographic concentration risk, competition from banks and NBFCs, dependence on rural borrowers, liquidity and refinancing risks, technology and cybersecurity risks, slower CASA growth, earnings volatility during stress periods, and valuation re-rating may take time.
- Buy at: ₹71–72
- Target price: ₹80 in two to three months
- Stop loss: ₹68
Nifty 50 performance on 6 August
Nifty 50 traded in a narrow range, reflecting a cautious undertone despite ending marginally higher. The index opened at 24,641.00, touched an intraday high of 24,677.05, slipped to a low of 24,604.15, and finally settled at 24,636.00, gaining 11.35 points (+0.05%). After opening on a positive note, the index briefly moved higher before witnessing mild profit booking, dragging it toward the day's low.
However, buying interest emerged near lower levels, enabling the benchmark to recover a significant portion of the decline and close to its opening level. The narrow trading range and subdued price action indicate a balance between buyers and sellers, suggesting that market participants remained cautious ahead of fresh domestic and global triggers. The ability to defend lower levels continues to reflect underlying resilience, although the absence of strong follow-through buying kept the index confined within a consolidation zone.
From a technical perspective, momentum indicators continue to favour the bulls, albeit with signs of moderation. The 14-day RSI stands at 62.20, comfortably above the neutral 50 mark, indicating sustained positive momentum without entering overbought territory.
Meanwhile, the MACD remains above its signal line and continues to print positive histogram bars, confirming that the prevailing intermediate-term trend remains constructive. The index is also trading above its 21- (24,217), 50- (23,970), and 100-DMA (23,827), highlighting strong trend support. Although it remains marginally below the 200-DMA at 24,767, which continues to act as a key long-term resistance. While momentum remains positive, the flattening price action suggests the market may require a decisive catalyst before extending its next directional move.
Technically, 24,600–24,550 now serves as the immediate support zone, followed by stronger support around 24,400 and the 21-DMA near 24,217. On the upside, 24,675–24,770 represents the first resistance zone, coinciding with the recent swing high and the 200-DMA, while a sustained breakout above this region could pave the way toward 24,900–25,000.
From a broader perspective, investors remain focused on Q1 FY27 earnings, sector-specific earnings dispersion, foreign institutional flows and global macro developments, all of which are influencing near-term sentiment. If the index holds above key short-term supports, the broader technical structure remains constructive. Although a decisive move above the 200-DMA will be essential to confirm a fresh bullish breakout and revive stronger upside momentum.
How did Nifty Bank perform?
Indian equity benchmarks closed slightly higher, with Bank Nifty ending 0.21% higher at 57,264.85 (+117.35 points) after finding resistance near 57,400. Mid-tier private lenders spearheaded gains, with AU Small Finance Bank (+1.00%), IDFC First Bank (+0.88%), and Federal Bank (+0.73%) outperforming Meanwhile heavyweights like IndusInd Bank (-1.07%) and HDFC Bank (-0.48%) underperformed and limited broader index expansion.
Macroeconomic sentiment remained steady, anchored by resilient foreign portfolio inflows, robust domestic growth metrics, and stable global cues following recent US. Federal Reserve policy commentary. Market breadth favoured advances slightly with an advance-decline ratio of 1.1:1 across financial counters.
Nifty Bank continues to display a cautious yet improving technical structure, with recent price action indicating consolidation after the previous up-move. The index formed a modest rebound from lower levels and is attempting to regain momentum. However, it continues to trade between its 50- and 200-DMA, reflecting an indecisive medium-term trend. Importantly, the 200-DMA is acting as stiff resistance, capping upside attempts and preventing a decisive bullish breakout.
On the momentum front, the RSI is hovering around the neutral 50 mark, suggesting balanced buying and selling pressure with no clear momentum dominance. Meanwhile, the MACD remains below the signal line, although the negative histogram has narrowed, indicating that bearish momentum is gradually easing and selling pressure is losing intensity.
Immediate support for Nifty Bank is placed near 56,750–56,550, coinciding with the recent swing low and the 50-DMA, while stronger support is seen around 55,700, near the 100-DMA. On the upside, immediate resistance is located at 57,450–57,550, aligned with the 200-DMA, followed by a stronger hurdle near 57,900–58,000. The index is likely to remain range-bound in the near term as investors await fresh domestic earnings, global central bank cues, and developments in overseas markets.
A sustained move above 57,550 could trigger renewed buying interest and improve sentiment, whereas a breakdown below 56,750 may invite further profit-booking and increase downside pressure.
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.