Domestic profit booking after the recent market rally also weighed on sentiment. Weak performance in key sectors such as automobiles and energy, and technical weakness further fuelled profit booking in the broader market.
Two stock recommendations for today by MarketSmith India
Buy: Fine Organic Industries Ltd (current price: ₹4,626.1)
- Why it’s recommended: Strong financial performance, industry leadership
- Key metrics: P/E: 33.87, 52-week high: ₹5,958.85, volume: ₹16.92 crore
- Technical analysis: Given trendline breakout
- Risk factors: Exposure to raw material price volatility, regulatory, and environmental compliance risks
- Buy at: ₹4,626.10
- Target price: ₹5,390 in three months
- Stop loss: ₹4,260
Also read: Page Industries needs sustained growth to support rich valuations
Buy: Sunteck Realty Ltd (current price: ₹417.75)
- Why it’s recommended: Strategic presence in high-growth micro-markets, robust project pipeline, and presales growth
- Key metrics: P/E: 40.18, 52-week high: ₹699, volume: ₹51.15 crore
- Technical analysis: Reclaimed its 100-DMA
- Risk factors: Liquidity risks, project execution risks
- Buy at: ₹417.75
- Target price: ₹480 in three months
- Stop loss: ₹389
How Nifty 50 performed on 20 May
Nifty 50 opened on a subdued note around 25,000 and traded sideways during the early hours. However, selling pressure intensified after the index breached 24,900, resulting in a sharp decline. It eventually closed near the day’s low at 24,683.90, forming a bearish candle on the daily chart. This, accompanied by higher volumes than in the previous session, signalled increased selling interest.
All major indices ended in negative territory, with auto, healthcare, media, and FMCG suffering the largest losses. Market breadth remained weak, as reflected by an advance-decline ratio of 2:5, indicating weakness across the sectors.
Also read: Delhivery part truckload business is on a higher margin path
Although the index closed below 25,000 on Tuesday, the overall trend remains positive as the index continues to trade above all its key moving averages. The relative strength index (RSI) has turned downward but remains in bullish territory, currently positioned around 58.
The MACD indicator has formed a negative crossover on the daily chart. However, it continues to hover above the zero line, suggesting that the broader upward momentum remains intact and has yet to be decisively negated.
According to O’Neil’s methodology of market direction, Nifty 50 has transitioned from a “rally attempt” to a “confirmed uptrend”.
The breach of crucial support at 24,700 suggests potential for further downside if the index fails to reclaim this level. The next important support is at the 21-day moving average, near 24,400. On the upside, resistance is positioned at 25,000-25,100, and a breakout above this zone would be critical to reversing the current negative trend.
How did Nifty Bank perform?
Bank Nifty opened on a positive note and initially traded in the green. However, it faced selling pressure in the latter half of the session, leading to a negative close. On the daily chart the index formed a bearish candle, characterised by a lower-high and lower-low price structure, signalling growing weakness. It also breached its 21-day moving average, further reinforcing the negative sentiment in the banking space. Nifty Bank opened at 55,445.30, traded within 55,568.35 and 54,829.45, and settled at 54,877.35.
On the daily chart, the RSI has flattened and is now tilting downward, currently positioned around 56. The MACD has formed a negative crossover while staying above the zero line, reflecting mixed short-term momentum within the context of an overall positive trend.
According to O’Neil’s methodology of market direction, Nifty Bank has transitioned from an “uptrend under pressure” to a “confirmed uptrend”.
Also read: Hyundai Motor looks to accelerate speed with EV, hybrid car
Sustained trading below the key psychological level of 55,000 may continue to exert downward pressure on the index. To regain bullish momentum, it must decisively reclaim and hold above 55,000. On the downside, if the index remains below this threshold, it could extend its decline toward the 21-day moving average, currently positioned near 54,400, which may serve as immediate support in the near term.
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.
Trade name: William O’Neil India Pvt. Ltd.
Sebi Registration No.: INH000015543
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.
