Two stock recommendations by MarketSmith India for 26 August:
- Why it’s recommended: Strong market leadership, robust financial performance, wide product portfolio and diversification, strong distribution network, and innovation and brand strength
- Key metrics: P/E: 70.61, 52-week high: ₹ 3,415.00, volume: ₹113.92 crore
- Technical analysis: Trending above all its key moving averages with a positive bias.
- Risk factors: Raw material price volatility, dependence on consumer demand, competitive pressure, global exposure, currency risk, regulatory, and ESG risks
- Buy: ₹ 3,107
- Target price: ₹ 3,430 in two to three months
- Stop loss: ₹ 2,950
- Why it’s recommended: Rapid capacity expansion with long-term visibility, strategic focus on hybrid and dispatchable RE
- Key metrics: P/E: 42.31; 52-week high: ₹310; volume: ₹ 215.79 crore
- Technical analysis: downward-sloping trendline breakout
- Risk factors: Capital-intensive expansion and leverage
- Buy at: ₹300–305
- Target price: ₹340 in two to three months
- Stop loss: ₹ 288
Nifty 50 recap
The Indian equity markets concluded on a positive note, buoyed by a global rally following dovish commentary from the US Federal Reserve at the Jackson Hole symposium. Nifty 50 closed at 24,967.75, up 98 points (0.39%), while Sensex gained 329 points (0.40%) to settle at 81,635.91.
Intraday, Nifty 50 opened with a strong gap-up, climbing to a high of 25,022 in the early hours. The index, however, faced profit booking at higher levels, leading it to give back some gains and consolidate in a narrow range for the remainder of the session before closing near the day’s midpoint. The market breadth remained negative, with the advance-decline ratio tilting against gainers, indicating underlying weakness in the broader market despite the benchmark indices’ strong performance. Nifty IT (+2%) was the top sectoral performer, driven by a positive outlook for US spending on technology. In contrast, mid and small-cap indices lagged, reflecting a cautious sentiment beyond the large-cap space.
From a technical standpoint, the Nifty 50 continues to trade below both its 50-DMA and the psychological 25,000 mark, signalling caution among market participants. The relative strength index (RSI) has rebounded from a key support level and is currently at 53, indicating a gradual improvement in momentum. Additionally, the MACD has turned positive, reflecting a reduction in downside pressure. However, it remains below both its signal line and the zero axis, suggesting that while sentiment is improving, a definitive confirmation of a sustained trend reversal is still awaited.
According to O’Neil’s methodology of market direction, market status has been downgraded to an “Uptrend Under Pressure” as Nifty breached its “50-DMA” and the “distribution day count” is at three.
The index is consolidating within the prior session’s range of 24,850–25,100. A decisive close below 24,850 could open the door for further downside, with the index likely to drift toward 24,650 and subsequently 24,500 in the near term. On the upside, immediate resistance remains at 25,100, and only a sustained move above this level would signal renewed strength and provide scope for a recovery.
How did Nifty Bank perform?
On Monday, Bank Nifty opened on a muted note and touched an intraday high of 55,306. However, the index soon witnessed profit booking at higher levels, which dragged it into negative territory and led to a weak close in the red. The price action resulted in the formation of a bearish candle, reflecting selling pressure in the market. Importantly, the index closed below its 100-DMA, adding to the cautious outlook. Moreover, it was unable to defend Friday’s low, further highlighting vulnerability at current levels. Bank Nifty opened at 55,147.75, reached an intraday high of 55,306, and a low of 55,048.4, before closing at 55,139.30.
The relative strength index (RSI) continues to trade sideways and is currently positioned around 40, reflecting persistent weakness in the index. At the same time, the MACD has turned positive after several weeks of a negative crossover. However, its placement below the central line still warrants caution. As per O’Neil’s methodology of market direction, Bank Nifty remains in an “Uptrend Under Pressure.” In this environment, investors are encouraged to remain selective, focusing on high-quality stocks and maintaining disciplined risk management, while allocating capital only to high-conviction opportunities.
From a technical perspective, the index breached its 100-DMA on Friday. It continued to trade below it, indicating mounting selling pressure. The immediate support is placed near 54,900, and a decisive break below this level could trigger another leg of downside. For any meaningful bullish reversal to emerge, the index must first reclaim its 100-DMA, followed by a sustained move above the 50-DMA. Until then, the bias remains cautious, and traders are advised to monitor these critical levels, as they will determine whether the trend strengthens on the downside or shifts toward a recovery phase.
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.
