
Stocks to buy: Two stock recommendations from MarketSmith India for 16 January

Summary
- Here are the two stock recommendations from MarketSmith India for Thursday, 16 January.
Nifty 50 on 15 January
On Wednesday, Nifty 50, India's benchmark index, ended the session nearly flat in a lacklustre trading day ahead of the US CPI data release. The index opened at 23,250.45 and traded within a narrow range of 23,146–23,293 before closing slightly lower at 23,213. This performance resulted in the formation of a doji candle, reflecting a tug-of-war between buyers and sellers.
IT, realty, and energy stocks posted gains, while pharma and auto stocks continued their downward trend, closing in the red. The advance-decline ratio remained flat, settling at an even 1:1.
From a technical standpoint, the Nifty 50 index continues to trade below all its key moving averages and critical technical support levels. The 14-day Relative Strength Index (RSI) remains in the bearish zone, hovering around 36 on the daily chart, while the Moving Average Convergence/Divergence (MACD) indicator also trends negative.
Under O'Neil's market direction methodology, the market status shifted to a Downtrend on Monday, as the Nifty breached its recent correction low of 23,256. Stocks have continued to decline, with many breaking below their logical support levels and moving deeper into their respective bases.
Looking ahead, the market status will shift to a Rally Attempt if Nifty closes in the green or in the upper half of the day's range and holds above that low for three consecutive sessions. To move back to a Confirmed Uptrend, a follow-through day would be required after the rally attempt.
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The index has breached its 200-day moving average (DMA) on the daily chart and its 50-week moving average (WMA) on the weekly chart, reflecting continued weakness. Overall market sentiment remains negative, with the index trading below all key short-term and long-term moving averages.
On the downside, immediate support at 23,000 is a critical level to watch. Short-term technical indicators suggest an oversold scenario, indicating the possibility of a bounce back toward the 200-exponential moving average (EMA) at 23,700. However, a decisive break below 23,000 could push the index further down to the 22,800–22,700 zone.
Nifty Bank performance
Nifty Bank ended on a flat note amid a volatile trading session on Wednesday. The index opened at 48,832 and traded in 48,522–49,083 band, closing 22 points higher. It has formed a high wave doji candle with a higher-high and higher-low price structure on the daily chart.
This major sectoral index is trading below all key moving averages and is trending with a negative bias. The momentum indicator, RSI, has bounced from oversold levels and is currently placed at 34, while the MACD remains in negative territory on the daily chart.
According to O'Neil's methodology of market direction, the market status has been shifted to a Downtrend, as it breached its 200-DMA and is currently trending below all its key moving averages with a negative bias. Looking ahead, we will shift the market status to a Rally Attempt if Nifty establishes a bottom and stays above its recent low for three straight sessions.
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The index is currently trending below its 200-DMA with a negative bias. If this upward movement continues, the index may retest 49,500–50,000 in the coming days. On the other hand, falling below 47,898, the recent low recorded on Monday, may turn more negative toward 47,000. Further, short-term technical indicators suggest some sort of upside bounce back is due in the coming days.
Stocks to buy, recommended by MarketSmith India:
● South Indian Bank: Current market price ₹ 26.03 | Buy range ₹ 25.50–26.25 | Profit goal ₹ 31 | Stop loss ₹ 24.50 | Timeframe 1–2 Months
● Emudhra: Current market price ₹ 923.35 | Buy range ₹890–930 | Profit goal ₹ 1,040 | Stop loss ₹ 865 | Timeframe 3–4 Months
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.