Stocks to buy on 17 February: MarketSmith India recommends these two stocks

However, after touching its previous swing low, the index managed to recover some of the losses and closed at 22,929.25. As a result, the index formed a bearish candle with lower high lower low price formation. Among the sectors, all major indices closed flat to negative. The advance-decline ratio was heavily inclined towards decliners. Further, on the weekly chart, the index snapped its streak of two consecutive weeks of gains and formed a bearish candle.

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From a technical standpoint, after taking crucial support around its previous swing low, i.e., 22,786, the index bounced back. The index continued to trade below all key moving averages with negative bias. The 14-day Relative Strength Index (RSI) is currently trending downward, positioned at approximately 38. The Moving Average Convergence Divergence (MACD) indicator has also witnessed a negative crossover below the central line.

According to O'Neil's methodology of market direction, on 11 February, we downgraded market status to an "Uptrend Under Pressure" as the Nifty breached its 21-DMA, and the distribution day count increased to two. From here onward, we may change the status to a Downtrend if the distribution day count increases or if the Nifty fails to hold above the correction low of 22,787. On the flip side, the market status will be changed back to a Confirmed Uptrend if the Nifty retakes 23,807.30 (its recent rally high).

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Looking ahead, the immediate strong support is placed around 22,800–22,750 levels; however, falling below these ranges may turn more negative in the coming days. Further, sustainable trading above 23,000 may attract some bounce back towards the 23,350–23,400 range.

How Nifty Bank performed

The Nifty Bank opened on a positive note on 14 February but after the opening hour of the trading session, the index witnessed selling pressure and entered the negative territory. As a result, the index formed a second consecutive bearish candle on the daily chart and breached its 21-DMA with deteriorated price momentum. On the weekly chart, the index formed a bearish candle and lost around 2.11% on the weekly basis. It opened at 49,485.65, fluctuated between 49,592.95 and 48,719.75, and closed at 49,099.45, marking a 0.53 % loss for the day.

The 14-day RSI has traded sideways and is currently placed around the 44 level on the daily chart. The Moving Average Convergence/Divergence (MACD) also shows a positive crossover on the daily chart, and is trending below its central line.

According to the O'Neil market direction methodology, we upgraded the market status to an Uptrend Under Pressure on 14 February. The distribution day was elevated to six, showing weakness in the index. We will change the status to a Downtrend if the distribution day count increases or if the Nifty Bank fails to hold above the correction low of 47,898.35. On the flip side, the market status will be changed back to a Confirmed Uptrend if the index retakes 50,641.75 (its recent rally high).

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The index breached its 21-DMA, which was placed near 49,318, and it should be watched vigilantly to track the strength in the market in terms of price action. Once the index reclaims and holds above its 21-DMA then it might move in the range of 49,500–50,000. However, on the downside, immediate support is placed near 48,700-48,500.

Two stocks to buy, recommended by MarketSmith India:

ICICI Bank Ltd: Current market price ₹1,260.10 | Buy range ₹1,240-1,265 | Profit goal ₹1,350 | Stop loss ₹1,215 | Timeframe 1–2 months

Bharti Hexacom Ltd: Current market price ₹1,365.55 | Buy range ₹1,345-1,370| Profit goal ₹1,550 | Stop loss ₹1,290 | Timeframe 1–2 weeks