Stocks to buy: Two stock recommendations from MarketSmith India for 17 January

Sector-wise, most indices ended in the green, with the exception of FMCG, IT, and Pharma, which posted losses. The advance-decline ratio leaned strongly toward advancers, closing at approximately 3:1.

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On the technical front, the index remains below its key moving averages and critical support levels. The 14-day Relative Strength Index (RSI) is trending upward at 39 on the daily chart, suggesting a slight recovery in momentum. However, the Moving Average Convergence Divergence (MACD) indicator continues to show a negative trend.

According to O'Neil's market direction methodology, the market status has been upgraded to a Rally Attempt as of Thursday. Tuesday marked the first day of this attempted rally, with the Nifty closing in positive territory. Importantly, the index has not breached its recent correction low of 23,047 since then, qualifying today as the third day of the rally attempt. A follow-through day is now required to confirm a shift to a Confirmed Uptrend from the previous Downtrend.

Technically, the index remains below its 200-day moving average (DMA) on the daily chart and its 50-week moving average (WMA) on the weekly chart, reflecting persistent bearish sentiment. The immediate support level to watch is 23,000. Short-term technical indicators, however, suggest an oversold condition, raising the possibility of a rebound toward the 200-exponential moving average (EMA) at 23,700. Conversely, if the index falls below 23,000, it could decline further to the 22,800–22,700 range.

Nifty Bank performance

On Thursday, Nifty Bank opened with a gap-up and remained in positive territory throughout the day. The index formed three consecutive bullish candles with a higher-high and higher-low price structure on the daily chart. The index opened at 49,082.90 and traded within the range of 49,459–49,038.45, closing at 49,278.70.

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The momentum indicator, RSI, is trending upward and is currently positioned around 39 on the daily chart, while the 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. If this upward movement continues, it may retest 49,500–50,500 in the coming days. On the other hand, falling below 47,898, which was the recent low recorded on Monday, may push the index lower towards 47,000. Further, the short-term technical indicators suggest an upside bounce back is due in the coming days.

Stocks to buy, recommended by MarketSmith India:

● Niva Bupa Health Insurance Co. Ltd: Current market price ₹ 82.19 | Buy range ₹ 81.50–83 | Profit goal ₹ 99 | Stop loss ₹ 75 | Timeframe 1–2 Months

● Ashoka Buildcon: Current market price ₹ 289.40 | Buy range ₹ 287–290 | Profit goal ₹ 350 | Stop loss ₹ 262 | Timeframe 1–2 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.