Sectorally, the Nifty PSU Bank and the Nifty Metal were the primary laggards, tumbling over 4% due to concerns over high government borrowing and falling global commodity prices. Conversely, IT stocks bucked the trend, gaining nearly 0.6%, following a supportive change in the taxation of share buybacks.
Despite the knee-jerk reaction to transaction costs, the underlying fiscal discipline and infra-focus in the budget provide a pragmatic long-term outlook for structural growth.
Two stock recommendations by MarketSmith India:
Buy: Sterlite Technologies Ltd (current price: ₹113)
Why it’s recommended: Strong play on 5G, fiberization, and digital infrastructure theme; beneficiary of government capex on telecom, broadband, and smart cities; presence across optical fiber, networking, and global telecom solutions; export exposure provides global growth opportunities; long-term demand visibility from data consumption and cloud expansion.
Key metrics: P/E: 235.95 | 52-week high: ₹140.40 | Volume: ₹297.24 crore
Technical analysis: Trendline breakout and reclaimed 100 DMA
Risk factors: High debt levels impact balance-sheet strength, cyclical nature of telecom capex spending, margin pressure due to volatile raw material prices, intense competition in optical fiber and telecom equipment, and dependence on large telecom operators’ spending cycles.
Buy: ₹111-114
Target price: ₹130 in two to three months
Stop loss: ₹104
Buy: Netweb Technologies India Ltd (current price: ₹3,300)
Why it’s recommended: Rising demand for HPC, AI, and data centre solutions, strong order book visibility and execution capability, government focus on indigenous technology and make-in-India initiatives
Key metrics: P/E:99.97 | 52-week high: ₹4,479 | Volume: ₹747.89 crore
Technical analysis: Trendline breakout
Risk factors: High dependence on government and institutional orders, margin sensitivity to component costs, and supply chain disruptions
Buy at: ₹3,290-3,320
Target price: ₹4,000 in two to three months
Stop loss: ₹3,000
Nifty 50: How the benchmark index performed on 1 February
Indian equities ended sharply lower on Monday, extending the recent corrective phase amid broad-based selling pressure. The Nifty 50 declined 1.96% to close at 24,825, after oscillating between 24,571 and 25,441 during the day, while the Sensex also saw a near-2% drop, reflecting sustained risk-off sentiment.
Market breadth was decisively weak, with the advance-decline ratio tilted heavily in favour of losers as 2,073 stocks declined against 1,054 advances, highlighting widespread participation in the sell-off.
Sectorally, the pressure was led by cyclicals and defensives alike. PSU banks were the worst hit, shedding over 5.5%, followed by metals (-4.0%), oil & gas (-2.9%), FMCG (-2.3%), and financial services (-2.4%). Auto and realty stocks also saw notable profit-taking. IT was the lone pocket of resilience, closing marginally higher as selective buying emerged on expectations of currency support and valuation comfort. Heavyweights across banks, metals and consumption dragged the benchmarks lower, while mid- and small-cap indices underperformed, reinforcing the cautious tone.
From a technical standpoint, the Nifty 50 has delivered a clear deterioration in price structure, with the latest session marking a sharp bearish candle accompanied by elevated volumes, signalling distribution rather than a routine pullback. The index has decisively broken below its short- and medium-term moving averages, reflecting a loss of upside momentum that had supported the trend over the past few months.
The sequence of lower highs in recent sessions further reinforces the shift from a trending to a corrective phase, indicating that sellers are gaining control on rallies. Momentum indicators corroborate the negative bias. The RSI has slipped into the low-30s zone, reflecting strong bearish momentum and a lack of buying strength, while remaining below its signal average. Meanwhile, the MACD is firmly in negative territory, with the MACD line extending below the signal line and the histogram expanding on the downside.
As per O’Neil’s market direction framework, the Nifty 50 index remains classified under a downtrend. From a tactical standpoint, traders should remain selective and prioritize risk management.
The index has decisively slipped below its 200-day moving average as well as the 24,900 mark, underscoring a clear weakening in the medium-term trend. On the downside, the 24,600-24,300 zone is expected to provide an immediate cushion, where some stabilisation or short-covering could emerge. However, in the event of a deeper corrective phase, incremental buying interest is likely to build closer to the 24,000 level, which coincides with a broader zone of medium-term demand. On the upside, given the breakdown from key averages and elevated volatility, the index is expected to remain range-bound in the near term, with price action largely confined within the 24,600-25,400 band as the market digests recent declines and looks for directional cues.
How did the Nifty Bank perform yesterday?
The Nifty Bank opened on a flat note at 59,607.65 and attempted a brief move higher in early trade, hitting an intraday high of 59,865.70. However, sustained selling pressure emerged at higher levels, leading to sharp profit-taking throughout the session. The index slipped to an intraday low of 57,783.20 before settling lower, finally closing at 58,417.20, down 1,193.25 points (-2.00%) for the day.
The price action reflects nervousness around the budget outcome and follow-through selling after recent consolidation near record highs. Volatility picked up noticeably, indicating active distribution by short-term participants. Despite intermittent intraday pullbacks in select banking stocks, broader participation remained weak, keeping the index under pressure and resulting in a decisive bearish close for the session.
From a momentum perspective, the RSI (14) moved towards the downside and is placed near 41, indicating weakening momentum and a drift toward the lower half of the neutral zone, though it has not yet entered oversold territory. This suggests loss of bullish strength rather than panic selling. The MACD has slipped further into negative territory, with the signal line below the zero line, highlighting a short-term bearish bias and fading upside momentum.
The momentum setup signals near-term consolidation with a negative tilt. However, the broader trend structure remains intact. As per O’Neil’s market direction framework, the Nifty Bank remains classified under a Uptrend Under Pressure. Investors may therefore view declines as corrective rather than trend-reversing at this stage.
On the technical levels, immediate support for the Nifty Bank is placed in the 58,000-57,800 zone, broadly coinciding with the 100-DMA, while a stronger medium-term support is seen near 56,800, aligned with the 200-DMA. A decisive breakdown below these supports could open the door for a deeper corrective phase. On the upside, the 59,500-59,600 zone has emerged as an immediate resistance, with a major psychological hurdle placed near 60,000. A sustained move above these levels is essential to restore bullish momentum. In the near term, the index is likely to trade in a range with a negative bias, and any rebound may encounter selling pressure unless accompanied by strong volumes and improved broader market cues.
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.
