On Tuesday, the Nifty 50 dropped 0.70% to close at 24,826.20 points due to a mix of global and domestic pressures. Weak global cues, particularly concerns over US fiscal and trade policies, weighed on investor sentiment. Selling pressure at home near the resistance zone and the previous supply zone also dragged the market. Sectoral declines in IT, banking/financials, auto, and FMCG stocks further dragged the index down. Overall, caution ahead of key economic events and global uncertainty contributed to the market’s downturn.
Two stock recommendations for 28 May by MarketSmith India
Buy: Welspun Corp Ltd. (Current price: ₹783.5)
- Why it’s recommended: Strategic expansion and diversification, recognition, and market position
- Key metrics: P/E: 24.17 | 52-week high: ₹900.00 | Volume: ₹51.69 crore
- Technical analysis: Reclaimed 100-DMA
- Risk factors: Raw material price volatility, intense industry competition
- Buy at: ₹783.5
- Target price: ₹890 in three months
- Stop-loss: ₹745
Buy: Tata Chemicals Ltd (Current price: ₹900)
- Why it’s recommended: Leadership in soda ash and specialty chemicals, focus on sustainability, and green chemistry
- Key metrics: P/E: 67.23 | 52-week high: ₹1,247 | Volume: ₹ 157.19 crore
- Technical analysis: Horizontal trendline breakout
- Risk factors: Commodity price volatility, global demand uncertainty
- Buy at: ₹900
- Target price: ₹1,010 in three months
- Stop-loss: ₹849
Nifty 50: How the benchmark index performed on 27 May
Nifty 50 opened on a weak note below 25,000 and witnessed volatile movement throughout the session. The day’s price action resulted in the formation of a high wave bearish candle with a lower-high and lower-low price structure compared to the previous day on the daily chart.
On the sectoral front, all major indices, along with the broader market indices, ended on a flat to negative note. The advance-decline ratio remained neutral, closing near 1:1, indicating broad-based market indecision.
The Nifty 50 failed to sustain above 25,000 but continued to trade above all its key moving averages. It has been consolidating within a defined range of 25,200-24,400 over the past couple of weeks. Momentum indicators reflect indecision, with the RSI oscillating in a range-bound zone, suggesting a lack of directional strength. The daily MACD has formed a negative crossover, indicating potential bearish momentum, though it remains above the central (zero) line, which offers a mildly positive undertone.
According to O’Neil’s methodology of market direction, Nifty 50 has transitioned from a “Rally Attempt” to a “Confirmed Uptrend”.
However, the index closed near the day’s low, reflecting clear signs of resistance in 25,000-25,200, coinciding with a previously established supply zone. The current price action indicates that a decisive breakout and sustained move above this resistance band is essential to re-establish a bullish trend. Until then, it is likely to remain volatile and trade within a range. On the downside, key support is at 24,500-24,400.
Nifty Bank’s performance on 27 May
On Tuesday, Bank Nifty opened on a weak note and traded in a volatile range between 55,831 and 55,037, ultimately closing at 55,420.10, down 0.39% for the session. On the daily chart, the index formed a long-legged Doji with a lower-high and lower-low compared to the previous session, reflecting indecision in the market. The price action suggests a phase of consolidation within the broader uptrend. A sustained breakout above 56,000 could potentially signal the start of a fresh upward leg.
Technically, despite the current sideways movement, the index continues to trade above all its key moving averages and remains positioned near its all-time highs across multiple timeframes. However, momentum indicators reflect a pause in bullish sentiment. The relative strength index (RSI) on the daily chart is hovering around 58, indicating neutral territory, while the moving average convergence divergence (MACD) has shown a negative crossover, with both indicators appearing relatively flat.
According to O’Neil’s methodology of market direction, Nifty Bank has transitioned from an “Uptrend Under Pressure” to a “Confirmed Uptrend”.
The Bank Nifty continues to trade in a sideways range, and a decisive breakout above the 56,000 level is crucial to confirm the continuation of the prevailing bullish trend. In the absence of such a breakout, the index is likely to remain within its current consolidation phase. A sustained move and close above the 56,000 mark could open the door for an upward move towards the 57,500-58,800 zone in the near term. On the downside, immediate support is placed around the 55,000 level, followed by 54,500.
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)
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.
