Markets
Stocks to buy: Two stock recommendations from MarketSmith India for 20 January
Summary
- Here are the two stock recommendations from MarketSmith India for Monday, 20 January.
Nifty50 on 17 January
India's benchmark index Nifty50 closed below the 50-WMA and formed another bearish candle on last week's chart. Taking cues from the global and domestic markets, the index started the session with a gap-down opening at 23,277 and continued to trade in negative trajectory, closing at 23,203.20. It lost gains from the last three days and formed a bearish candle with a lower-high and lower-low price structure. On the sectoral front, IT and banking sectors were the biggest losers, which dented the market sentiment on Friday, while Reliance was the biggest gainer. The advance-decline ratio was almost flat and settled around 1:1.
From a technical perspective, the index is still trading below all its key moving averages and key technical support levels. The 14-day relative strength index (RSI) is trending flat and is currently positioned around 37 on the daily chart, whereas the moving average convergence/divergence (MACD) indicator is still trending negative.
According to O'Neil's methodology of market direction, we shifted the market status to a ‘rally attempt’ on Thursday. Tuesday’s session was considered day one of an attempted rally as Nifty closed in the green. Nifty has not breached the correction low of 23,047 since day one. Hence, today’s action qualifies as day three of an attempted rally. So, we are changing the market status to a ‘rally attempt’ from a downtrend. From here, we would prefer to see a follow-through day before shifting the market to a ‘confirmed uptrend’.
Currently, the index has breached its 200-DMA on the daily chart and the 50-WMA on the weekly chart. The overall market sentiment remains negative as it is trending below all short-term and long-term key moving averages. On the downside, the immediate support of 23,000 is a key level to watch, as a fall below this may extend the decline toward 22,800–22,700. However, in the case of an upside bounce, 23,600, followed by 23,800, are the immediate resistance levels.
Also Read: Mint Primer | Stormy Monday: What to expect, going ahead
How Nifty Bank performed?
Today, Bank Nifty opened with a gap-down and remained in negative territory throughout the day. Yesterday, the index snapped a three-day gaining streak and formed a bearish candle with a lower-high and lower-low price structure on the daily chart. On the weekly timeframe chart, the index formed a third consecutive bearish candle, indicating a continuation of the bearish trend. The index opened at 48,959.50 and traded within the range-bound zone of 49,047.20–48,309.50, closing at 48,540.60.
The momentum indicator, RSI, is trending sideways and is currently positioned around 35 on the daily chart, while the moving average convergence/divergence (MACD) indicator is still trending negative.
According to O'Neil's methodology of market direction, we are changing the market status to a Rally Attempt. Tuesday's session was considered day one of an attempted rally as the index closed in the green. The index has not breached the correction low of 49,230.15 since day one. Hence, today's action qualifies as day three of an attempted rally. So, we are changing the market status to a ‘rally attempt’ from a ‘downtrend’. From here, we would prefer to see a follow-through day before shifting the market to a ‘confirmed uptrend’.
The index is currently trending below its 200-DMA with a negative bias in the broad range of 48,000–49,500. Further on the downside, falling below 47,898, the recent low recorded on Monday, may accelerate the decline toward 47,000. On the upside, strong resistance is placed in the 49,500–50,000.
Also read: Analysts love these four stocks in this struggling sector
Stocks to buy, recommended by MarketSmith India:
Bharat Dynamics: Current market price ₹1,276.25| Buy range ₹1,245–1,280| Profit goal ₹ 1,580| Stop loss ₹ 1,120| Timeframe 2–3 months
The Fertilisers and Chemicals Travancore (FACT): Current market price ₹951.10 | Buy range ₹925–955| Profit goal ₹1,130 | Stop loss ₹ 865| Timeframe 2–3 months
Also Read: Has the market finally bottomed? Time to pounce?
