Markets
Stocks to buy: MarketSmith India recommends these two stocks for 6 February
Summary
- MarketSmith India recommends these two stocks for Thursday, 6 February.
Nifty 50 on 6 February
The Nifty 50, India's benchmark index, closed 43 points lower at 23,772.05 and snapped its two-day gaining streak. Taking cues from the global markets, the index started the session with a muted opening at 23,801.75 and continued to trade in a broad range of 23,680–23,810 to close near the day’s low. As a result, the index formed a bearish candle on the daily chart. Barring FMCG and realty, all other major sectoral indices closed higher. The advance-decline ratio was inclined toward advancers, as it stood around 2:1.
From a technical perspective, the index managed to close above its 50- and 100-EMA. However, today, it faced some resistance around its 50-DMA as well as a downward-sloping trendline connecting the high of September 2024 to that of December 2024. The 14-day, relative strength index (RSI), is trending sideways and is currently positioned around 56. Another technical indicator, the moving average convergence/divergence (MACD), has turned above positive crossover but is still trending below its central line.
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According to O'Neil's methodology of market direction, the Nifty staged a follow-through day on Tuesday as it advanced more than 1.5% on higher volume than Monday’s session. Hence, we are upgrading the market status to a Confirmed Uptrend. We may downgrade the status to an Uptrend Under Pressure if the distribution day count increases and the Nifty breaches its key support level.
The index has now approached its 50-DMA, i.e., 23,770. Hence, moving forward, the 50-DMA is a key level to watch. Sustainable trading above it may lead the index toward the 200-DMA, i.e., 24,000–24,200 in the coming days. However, a failure to trade above its 50-DMA may witness a lacklustre trading session.
How did the Nifty Bank perform?
The Bank Nifty had a gap-up opening of 244 points and stayed in positive territory throughout Wednesday. It formed a bullish candle with a higher-high and higher-low price structure on the daily chart and reclaimed its 200-EMA with a positive bias. On 5 February, it opened at 50,402.30, fluctuated between 50,522.15 and 50,215.45, and closed at 50,343.05, marking a 0.37% gain.
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The 14-day, RSI, is gradually improving and is currently placed around 57 on the daily chart. The MACD shows a positive crossover on the daily chart, though it is still below the central line.
According to O'Neil's methodology of market direction, we downgraded the market status to an Uptrend Under Pressure on Monday last week, as the Nifty Bank breached its current support level of 48,300 with an elevation in distribution days. Moving forward, the recent low, i.e., 47,898.35, is a key level to watch as we may shift the market status to a Downtrend, when the index breaches it.
The price structure in the banking sector is improving, with the index moving upward after reclaiming its 200-EMA. If the current buying momentum continues, the index could reach 50,800–51,000 in the coming days. However, on the downside, the immediate support is placed in the range of 49,400–49,200.
Stocks recommended by MarketSmith India:
CreditAccess Grameen Ltd: Current market price ₹1,067.7 | Buy range ₹1,040–1,075 | Profit goal ₹1,260 | Stop loss ₹977 | Timeframe 2–3 months
Force Motors Ltd: Current market price ₹6,782.30 | Buy range ₹6,550– 6,800 | Profit goal ₹8,200 | Stop loss ₹6,200| Timeframe 2–3 months
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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.
