Selling was prominent in heavyweight sectors like banking and metals. Despite Friday’s decline, both Nifty and Sensex closed the week with gains of around 1% each, while the broader midcap and smallcap indices outperformed. This week’s resilience was largely driven by optimism around potential GST reforms and sustained domestic institutional investor (DII) buying, which helped the indices recover from their recent corrective phase.
Two stock recommendations by MarketSmith India for 25 August
Buy: Aadhar Housing Finance Limited (current price: ₹ 520)
- Why it’s recommended: Consistent profit growth, robust asset growth, strategic market positioning, and positive industry outlook
- Key metrics: P/E: 23.56, 52-week high: ₹ 537.50, volume: ₹29.16 crore
- Technical analysis: Reclaimed its 21-DMA and is trending above all its key moving averages with a positive bias.
- Risk factors: Credit risk and asset quality, interest rate and liquidity risks, regulatory and legal risks, operational and market risks, and collateral and information risks
- Buy: ₹ 520
- Target price: ₹ 590 in two to three months
- Stop loss: ₹ 490
Buy: Tega Industries Limited (current price: ₹1,874)
- Why it’s recommended: Global leadership in consumables for mining and mineral processing, early momentum in the equipment business, and international expansion
- Key metrics: P/E: 62.98; 52-week high: ₹2,329; volume: ₹ 40.71 crore
- Technical analysis: downward sloping trendline breakout
- Risk factors: Cyclical exposure to mining capex, high dependence on consumables, with competitive pressures
- Buy at: ₹1,850–1,880
- Target price: ₹2,150 in two to three months
- Stop loss: ₹ 1,760
Nifty 50 recap
On Friday, Indian equities snapped a six-day winning streak, with Nifty 50 closing 0.85% lower at 24,870, and Sensex shedding 689 points to end at 81,307. The session saw a weak opening and extended losses through the day, with Nifty briefly slipping below 24,850 intraday, pressured by broad-based selling across sectors. Financials and IT led the decline, while FMCG and Auto saw profit booking. The advance-decline ratio tilted downward sharply, reflecting broad market weakness. On the weekly front, Nifty posted gains of approximately 1%, marking its second straight weekly rise, though momentum faded post mid-week.
From a technical perspective, Nifty 50 decisively breached its 50 DMA, indicating a shift in momentum. The relative strength index (RSI) has tilted downward and is currently positioned at 51, reflecting a weakening in momentum. Meanwhile, the MACD has turned marginally positive, suggesting a reduction in downside pressure. However, it remains below both its signal line and the zero axis, indicating that while sentiment has shown some improvement, a clear confirmation of a sustained trend reversal is awaited.
According to O’Neil’s methodology of market direction, the market status has been downgraded to an “Uptrend Under Pressure” as Nifty breached its “50-DMA” and the “distribution day count” is at three.
Nifty 50 was unable to sustain above its 50-DMA and 25,000, eventually settling near its key support level of 24,850. A decisive close below this zone could trigger further downside movement, with the index likely to drift toward 24,650 and 24,500 in the coming sessions. On the upside, immediate resistance is placed at 25,100, and only a sustained move above this level would signal strength and open room for further recovery.
How Nifty Bank performed
On Friday, Bank Nifty remained in the red throughout the day. The index formed a bearish candle on the daily chart with a lower-high and lower-low price structure, breaching its 100-DMA, indicating increasing selling pressure. Bank Nifty opened at 55,669.25, reached an intraday high of 55,745, and a low of 55,102.6, before closing at 55,149.40. On the weekly chart, the index formed a bearish candle with a higher-high and higher-low price structure. However, it breached its 21-WMA, signaling potential weakness in the near term.
The momentum indicator, RSI, has turned downward and is currently positioned at 41, indicating weakness in the index. Meanwhile, the MACD has shifted to a positive territory after several weeks of a negative crossover, but its position below the central line continues to signal caution. According to O’Neil’s methodology of market direction, Bank Nifty remains in an “Uptrend Under Pressure.” In light of this, investors are advised to adopt a selective approach, focusing on high-quality stocks while prioritising disciplined risk management to protect capital and concentrating only on high-conviction opportunities.
From a technical standpoint, the index has breached its 100 DMA, signalling increasing selling pressure. Immediate support is located around 54,900, and if this level is breached, the index could experience another leg of downside movement. For a bullish trend to materialize, the index must first reclaim its 21-DMA, followed by its 50-DMA, to establish sustained upward momentum. Traders should closely monitor these key levels, as a break below support could reinforce the bearish outlook. Meanwhile, a recovery above these moving averages could signal a shift towards a positive trend.
MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. Trade name: William O’Neil India Pvt. Ltd. (Sebi-registered Research Analyst Registration No.: INH000015543)
Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.
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.
