Markets
Stocks to buy: Two stock recommendations from MarketSmith India for 12 December
Summary
- Here are two stocks recommended by MarketSmith India for Thursday, 12 December.
Nifty50 on 11 December
The Nifty50 continued to consolidate around its 50- and 100-day moving average (DMA) and traded in a narrow range for a fourth consecutive day. On Wednesday the index ended 0.13% higher in a lackluster trading session and formed a doji candle with a higher-high and higher-low price structure, indicating indecisiveness among buyers and sellers. It continued to trade in the range of 24,584–24,691 and closed 32 points higher at 24,642. The advance decline ratio was also flat at 1:1.
Technically, Nifty has retraced 50% of its recent fall and is currently facing resistance around its 100-DMA, placed around 24,700. This level may be a crucial factor in today’s trading session. The momentum indicator, 14-period relative strength index (RSI), was trading in an upward direction and is currently placed around 58. Another technical indicator, the moving average convergence/divergence (MACD), is trending with a positive crossover and is currently placed above the central line.
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The ongoing trend indicates a bullish sentiment in the market. However, the index faces resistance around its 100-DMA (i.e., around 24,700). Fresh bullish calls can only be taken if the index crosses and holds above this. Sustainable trading above 24,700 may open an upside window toward 25,000-25,200. However, failure to cross and hold above it may result in volatility.
According to O'Neil's methodology of market direction, the market’s current status is a ‘rally attempt’. A rally attempt begins on the third day when the index closes higher off the most recent bottom after being in a correction.
How Nifty Bank performed
The bank index opened on a negative note and traded with a negative bias for most of yesterday’s session. This was due to the underperformance of public sector banks, which dragged the Bank Nifty lower. It has formed a bearish candle and has been trading sideways for the past four days. The index opened at 53,459.30, traded in the range of 53,302.15 to 53,648.05, and closed at 53,391.35.
The momentum indicator, RSI, has flattened and moved slightly upward. It is currently placed around 62, along with a positive crossover on MACD. Apart from RSI and MACD, another trend directional indicator, the average directional index (ADX), also suggests a strong bullish trend in this index.
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Currently, the upper end is capped at 53,900–54,000, which acts as a strong hurdle. Once this level is crossed, the index may move toward 54,500 in the coming days. Sustainable trading above 54,500 may push the index into uncharted territory with strong momentum, potentially driving it toward 57,000 in the coming weeks. However, failure to cross and hold above this resistance may result in choppy trading.
According to O'Neil's methodology of market direction, the market is currently in a ‘confirmed uptrend’. The uptrend begins with a follow-through day or when the index reclaims its previous uptrend high.
Two stocks recommended by MarketSmith India:
- Mrs. Bectors Food Specialities Ltd: Current market price ₹ 1,865.10 | Buy at ₹ 1,840–1,880 | Profit goal ₹ 2,240 | Stop loss ₹ 1,740 | Timeframe 2-3 months
- eMudhra Ltd: Current market price ₹908.55 | Buy at ₹ 890–920 | Profit goal ₹1,040 | Stop loss ₹ 845 | Timeframe 3-4 months
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