Stocks to buy: Two stock recommendations from MarketSmith India for 19 December
Nifty50 on 17 December
Nifty50 opened with a gap down and traded in the negative on Tuesday. It accelerated downward as the day progressed and was down 137 points at close. Market action during the day formed another bearish candle with a lower-top and lower-bottom price structure.
All sectors closed in the red, with the biggest losses coming from the financials, energy, auto and metal sectors. The advance-decline ratio was in favour of declines and settled around 1:3.
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Technically, the index breached its 50-day moving average (DMA), which is currently placed around 24,386, and closed below it. It also breached its 21-EMA and closed below it. The momentum indicator, 14-period relative strength index (RSI), fell below 48. Another technical indicator, moving average convergence/divergence (MACD), is still trending above its central line.
The index failed to hold above 24,700 and accelerated its downward trajectory ahead of the Federal Open Market Committee (FOMC) meeting. Last Friday’s low (24,180) is a critical level to watch in today’s trading session. The market may take its next cues from the FOMC meeting on Wednesday night. We therefore expect another volatile trading session with a negative bias.
Also read: A lot has to fall in place for IDFC First Bank’s stock to rebound
According to O’Neil’s methodology of market direction, the current market status is a “rally attempt.” A rally attempt begins on the third day when the index closes higher off the most recent bottom after being in a correction.
How Nifty Bank performed
Bank Nifty closed lower on Tuesday, holding marginally above its early breakout level, i.e., the trendline connecting the high of 3 October to that of 26 November, as well as its 21-DMA. Yesterday, the index opened on a negative note at 53,394.10, remained in negative territory throughout the session, and closed at 52,822. As a result, the index formed a bearish candle with a lower-high and lower-low price structure on the daily chart.
The momentum indicator, RSI, is trending downward and is currently placed around 53, along with a positive MACD above the central line.
The index witnessed a ‘distribution day’, which occurs when a major market index closes down 0.2% or more on higher volume than the previous day. Currently, the index has minor support around its earlier breakout level of 52,470-52,600. A failure to hold above 52,470 may extend the decline toward 52,900-52,700. On the flip side, 53,600–53,900 will continue to act as a strong hurdle.
According to O’Neil’s methodology of market direction, the current market status is a ‘confirmed uptrend’. The uptrend begins with a follow-through day or when the index reclaims its previous uptrend high.
Two stocks to buy, recommended by MarketSmith India:
- Coromandel International: Current market price ₹1,817.15 | Buy at ₹1,790–1,830 | Profit goal ₹2,100 | Stop loss ₹ 1,685 | Timeframe 2–3 months
- Maithan Alloys: Current market price ₹ 1,169.50 | Buy at ₹ 1,150–1,180 | Profit goal ₹1,320 | Stop loss ₹1,088 | Timeframe 2–3 months
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 taking any investment decisions.
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