The rally was driven by significant GST reform proposals, which introduced a simplified two-rate structure of 5% and 18%. These changes are expected to reduce prices of essentials and electronics while providing an estimated stimulus worth 0.7-0.8% of GDP.
Sentiment received a further boost from an S&P rating upgrade and easing geopolitical concerns following high‑level US‑Russia discussions. The auto and consumer sectors led the gains, with Maruti Suzuki surging around 8.2% and Hero MotoCorp jumping around 6.5%.
Two stock recommendations for today by MarketSmith India
Multi Commodity Exchange of India Limited(current price: ₹8,309)
- Why it’s recommended:Potential reclassification in AMFI’s cap lists, approval and launch of electricity futures, and dominant market position with strong fundamentals
- Key metrics: P/E: 64, 52-week high: ₹ 9,115.00, volume: ₹ 340.65 crore
- Technical analysis: Reclaimed its 21-DMA
- Risk factors: Regulatory & compliance risks, market & price volatility, policy & regulatory uncertainty, sectoral & economic sensitivity
- Buy: ₹8,309
- Target price: ₹9,250 in two to three months
- Stop loss: ₹7,860
Grasim Industries Limited (current price: ₹2,846)
- Why it’s recommended: Paints business scaling fast, chemicals, and specialty products leadership
- Key metrics: P/E: 22.15; 52-week high: ₹2,896; volume: ₹318.70 crore
- Technical analysis: Downward sloping trendline breakout
- Risk factors: Execution risk in scaling new ventures, commodity-centric cyclicality
- Buy at: ₹2,820-2,870
- Target price: ₹3,100 in two to three months
- Stop loss: ₹2,700
How the market performed on 18 August
Equity benchmarks extended their upward momentum on Monday, with the Sensex and Nifty gaining almost 1% on the back of sustained buying in auto and consumer durables. The Nifty 50 settled 245 points higher at 24,876.95, after briefly surpassing 25,000 with an intraday gain of 1.58%.
Market breadth remained supportive, as 14 of 16 sectoral indices advanced, with Auto (+3.4%) and Consumer Durables (+1.8%) at the forefront, while the mid- and small-cap indices also rose around 1% each, reflecting broad participation.
Investor sentiment was bolstered by expectations of a ‘big bang’ GST reform package by Diwali and an S&P sovereign rating upgrade. Together, these factors improved visibility on India’s growth and policy trajectory.
On the technical front, the index encountered resistance at its 50-DMA, which remains a key hurdle for further upside. The relative strength index (RSI) has recovered from oversold territory and recently broke above a downward-sloping trendline. It is now consolidating near the neutral 52 level, indicating improving momentum. The MACD has turned positive but remains below both its signal line and the zero axis, suggesting that although downside pressures have eased, a sustained confirmation of 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” rose to six.
Going forward, 25,000 and the 50-DMA will remain key resistance zones. A decisive close above the 50-DMA could open a path for further upside toward 25,250-25,350 in the near term. On the downside, immediate support is placed at 24,700. A break below this could negate the ongoing recovery attempt and reintroduce selling pressure, with subsequent support levels aligned at 24,600 and 24,350.
How did Nifty Bank perform?
Nifty Bank has a gap-up opening on Monday and sustained its momentum throughout the session. The index opened at 55,940.60 and traded within 55,647.65 and 56,156.30 before closing at 55,734.90.
It formed a bullish candle pattern on the daily chart, marked by a higher-high and higher-low price structure, indicating continued strength. It gained nearly 0.71% intraday, reflecting resilient buying interest. Financial stocks, particularly banking majors, were among the key drivers.
The rally was largely aligned with the broader market uptrend. These reforms are expected to stimulate consumption and economic activity, further supporting sectoral strength in banks.
The RSI edged higher than in the previous session and is now placed at 48. The MACD continues to display a negative crossover, signaling persistent weakness in momentum. Collectively, these indicators point to a short-term bearish bias, warranting a cautious approach.
However, according to O’Neil’s methodology of market direction, Nifty Bank remains in an “Uptrend Under Pressure”.
Nifty Bank ended the session in positive territory while retesting its 21-DMA, though it ultimately closed just below this key level. The ongoing buying momentum indicates potential for the index to reclaim its 50-DMA near 56,350 in the coming sessions.
On the downside, immediate support is seen at around 56,200, making it a critical level to watch. A decisive breach below this zone could invite volatility and dampen sentiment. For now, the trend remains constructive, provided support levels are respected.
MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. It offers tools and resources to help investors make informed decisions based on the CAN SLIM methodology, founded by legendary investor William J. O’Neil. You can access a 10-day free trial by registering on its website.
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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.
