Stocks to buy: Two stock recommendations from MarketSmith India for 1 February

Following global market trends, the index opened flat at 23,296.75 but quickly gained momentum throughout the day, closing near its high at 23,508.40. This resulted in a bullish candlestick with a higher-high and higher-low structure. All major sectoral indices ended in the green, with the broader market also participating in the rally. The advance-decline ratio favored advancers, standing at 3:1.

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From a technical standpoint, the Nifty 50 broke out of a consolidation range between 22,976 and 23,426, reclaiming its 21-day moving average (DMA). The 14-day relative strength index (RSI) continues to trend upwards, currently hovering around 52. Meanwhile, the moving average convergence/divergence (MACD) has moved into a positive crossover, though it remains below its central line.

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 Nifty closed in the green. Nifty did not breach the correction low of 22,787 since day one. Hence, Friday'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 managed to close above its 21-DMA and a downward sloping trendline connecting closing points of 13 December 2024, and 2 January 2025. Moving ahead, sustainable trading at the 23,350–23,400 levels may lead the index toward 23,600–23,800, followed by 24,000–24,200 in the next few weeks. However, failure to cross and hold above 23,400 may keep the index range-bound between 23,400 and 23,000.

How Nifty Bank Performed

On Friday, Bank Nifty started on a slightly negative note. However, the index saw buying interest that pushed it into positive territory by the end of the day. It formed its fourth consecutive bullish candle, closing above its 21-DMA with a positive outlook. On the weekly chart, the index showed a bullish engulfing pattern, gaining 1,219.40 points, or 2.52%. On Friday, it opened at 49,259.65, fluctuated between 49,674.80–49,031.80, and closed at 49,587.20, marking a gain of 0.56%.

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The 14-day RSI has moved upward and is currently around 50 on the daily chart. The MACD also shows a positive crossover on the daily chart, though it is still below the central line.

According to O'Neil's methodology of market direction, we downgraded the market status to an Uptrend Under Pressure on Monday as Nifty Bank breached its current support level of 48,300 with an elevation in distribution days. From now onward, 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.

The index holding and trading above its 21-DMA may lead the index toward 50,000–50,200 in the coming few days. However, on the flip side, breaching below the 21-DMA could result in a lackluster trend.

Stocks recommended by MarketSmith India:

● Minda Corp.: Current market price ₹ 570.40 | Buy range ₹ 555–573 | Profit goal ₹ 690 | Stop loss ₹ 518 | Timeframe 2–3 Months

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● Indian Renewable Energy Development Agency: Current market price ₹ 202.11 | Buy range ₹ 197–204 | Profit goal ₹ 240 | Stop loss ₹ 184 | 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.