Markets
Stocks to buy: Two stock recommendations from MarketSmith India for 4 February
Summary
- Here are the two stock recommendations from MarketSmith India for Tuesday, 4 February.
Nifty50 on 3 February: A recap
Nifty50, India's benchmark index, closed 120 points lower at 23,361.05 as global uncertainty weighed on sentiment. The decline was driven by US President Donald Trump’s trade tariffs, a weaker rupee, and concerns over subdued government spending.
Following global market cues, the index opened with a gap-down at 23,319.35 and traded within a narrow range of 23,222–23,381. As a result, Nifty formed a bearish candle, characterized by a lower-high and lower-low price structure. Barring IT and Consumer Durables, all major sectoral indices ended in the red. Market breadth favored declines, with the advance-decline ratio settling at approximately 1:3.
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On the technical front, Nifty50 faced resistance near its 200-EMA before turning negative. The 14-day Relative Strength Index (RSI) is trending slightly downward, currently positioned around 48–49. Meanwhile, the Moving Average Convergence Divergence (MACD) has formed a positive crossover but remains below its central line.
According to O'Neil's methodology of market direction, we are changing the market status to a Rally Attempt. Last Tuesday's session was considered day one of an attempted rally as Nifty closed in the green. Nifty did not breach the correction low of 22,787 since day one. Hence, Monday'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. On the flip side, if Nifty breaches its recent low of 22,787, the market will be moved back to a downtrend.
The index faced a strong resistance around its 200-EMA and turned volatile again. Moving Forward, 23,600–23,650 is a key level to watch in the coming days. The index must cross these levels to turn bullish. Bias may remain negative below these levels. On the downside, the immediate support is placed around 23,200.
How Nifty Bank performed
On Monday, Bank Nifty opened with a gap-down of 432 points and remained in negative territory throughout the session. The index formed a bearish doji candle on the daily chart, characterized by a lower-high and lower-low price structure, and slipped below its 21-day moving average (DMA) with a negative bias. It opened at 49,074.80, fluctuated between 49,373.45 and 48,906.05, and closed at 49,210.55, registering a 0.60% decline.
From a technical standpoint, the 14-day Relative Strength Index (RSI) has slightly turned downward, currently positioned around 46. Meanwhile, the Moving Average Convergence Divergence (MACD) has formed a positive crossover on the daily chart but remains below its 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 Nifty Bank breached its current support level of 48,300 with an elevation in distribution days. Moving ahead, 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.
Nifty Bank breaches its 21-DMA and negativity accelerated. Hence, looking at the current juncture, 48,000 in the downside and 50,000 on the upside may act as support and resistance, respectively. A breakout on either side could drive the index in the same direction this week.
Stocks recommended by MarketSmith India:
● Fsn E-Commerce Ventures Ltd: Current market price ₹ 178.90| Buy range ₹ 175–182| Profit goal ₹ 226| Stop loss ₹ 163| Timeframe 2–3 Months
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● Metro Brands Ltd: Current market price ₹ 1,295.05 | Buy range ₹ 1,250–1,300| Profit goal ₹ 1,580| Stop loss ₹ 1,160| Timeframe 2–3 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.
