Stock recommendations for 15 October from MarketSmith India

Stock market recap: Benchmark stock indices Sensex and Nifty closed lower on Wednesday as investors booked profits after a sharp rally in the previous session, while a spike in wholesale price inflation and firm crude oil prices weighed on sentiment.

The 30-share BSE Sensex fell 251.89 points, or 0.34%, to settle at 72,781.89. During the session, it touched a high of 73,195.26 and a low of 72,578.75.

The 50-share NSE Nifty declined 99.25 points, or 0.44%, to close at 22,622.70.

Among the 30 Sensex constituents, Bajaj Finance, Mahindra & Mahindra, Bajaj Finserv, Eternal, ICICI Bank and InterGlobe Aviation were among the major laggards.

Infosys, Tech Mahindra, Tata Consultancy Services, Hindustan Unilever, NTPC and Reliance Industries were among the major gainers.

Buy: Jindal Saw Ltd (current price: ₹297)

• Why it’s recommended: Strong water infrastructure and Jal Jeevan Mission-led demand is driving robust growth in the high-margin ductile iron (DI) pipe business. A healthy domestic and export pipeline order book provides multi-year revenue visibility across water, oil & gas, and infrastructure projects.
• Key metrics: P/E: 30.14, 52-week high: ₹320.00, volume: ₹84.20 crore
• Technical analysis: Trendline breakout
• Risk factors: Dependence on government and EPC-led projects exposes the company to order delays and payment of collection risks. Volatility in steel prices and geopolitical disruptions in export markets can impact margins and execution.
• Buy: ₹294–298
• Target price: ₹342 in two to three days
• Stop loss: ₹280

Buy: Shyam Metalics and Energy Ltd (current price: ₹1,141)

• Why it’s recommended: Large ongoing capex in stainless steel, aluminium, and value-added products is expected to drive strong earnings growth over the next few years. Backward integration and captive power facilities provide a structural cost advantage and support profitability.
• Key metrics: P/E: 27.35, 52-week high: ₹1,148.00, volume: ₹53.67 crore
• Technical analysis: Flat base pattern breakout
• Risk factors: Earnings remain exposed to cyclical fluctuations in steel, ferro-alloy, and metal prices. Execution delays or cost overruns in expansion projects could affect return ratios and growth expectations.
• Buy at: ₹1,130–1,147
• Target price: ₹1,290 in two to three months
• Stop loss: ₹1,070

How Nifty 50 performed

The Nifty 50 opened slightly lower at 22,715.75, against the previous close of 22,721.95, and touched an intraday high of 22,757.95. After Tuesday’s 1.6% rally, profit booking at higher levels dragged the index to a low of 22,558.95. It eventually closed at 22,622.70, down 99.25 points, or 0.44%.

IT and FMCG stocks supported the index, led by Nestle India (+3.69%), Tata Consumer (+2.91%), Infosys (+2.44%) and TCS (+2.11%). Financial stocks weighed on the market, with Shriram Finance (-3.85%), HDFC Life (-2.85%) and Bajaj Finance (-2.62%) among the biggest losers. Market breadth remained weak, with 16 stocks advancing and 34 declining.

The index failed to sustain levels above 22,750 after the sharp rally, indicating that investors continued to sell into strength. Its close below the 21-day simple moving average (SMA) of 22,871 keeps the short-term trend tilted lower.

The 14-day relative strength index (RSI) stands at 41.66, recovering from oversold levels in the mid-20s and moving well above its signal average of 32.01. However, it remains below 50, suggesting that momentum is improving but has yet to turn bullish. The moving average convergence divergence (MACD), at -311.48, has crossed above its signal line at -331.67, with the histogram turning positive at +20.19. This is an early bullish crossover, although both lines remain deep in negative territory.

In early October, the index retested the 22,200 zone while the RSI formed a higher low, suggesting a possible positive divergence. A trend reversal would require the RSI to move above 50 and the MACD to recover towards the zero line.

Immediate support lies at 22,560, followed by 22,200-22,250, where the index bottomed in April and early October. The next major support is at 22,000. On the upside, resistance is at 22,760, followed by the 21-day SMA near 22,870 and the 23,600-23,770 zone, marked by the 50-day and 100-day SMAs.

Macroeconomic pressures remain a concern. Wholesale price inflation rose to 11.39% in September, while consumer price inflation stood at 5.54%. The Reserve Bank of India’s policy rate is at 5.50%. Foreign investors continue to sell, while domestic institutions remain net buyers. HDFC Bank and ICICI Bank are scheduled to report their September-quarter results on October 17.

Until then, the Nifty is expected to move sideways in the 22,200-22,900 range. A sustained close above 22,900 could open the way towards 23,300.

How did the Nifty Bank perform?

The Nifty Bank opened lower at 55,406.70, against the previous close of 55,481.05. Early buying lifted it to an intraday high of 55,644.70, but profit booking at higher levels dragged it to a low of 55,168.20. The index eventually closed at 55,316.00, down 165.05 points, or 0.30%. The long upper wick indicates selling pressure around 55,600-55,650.

Banking stocks moved in different directions. Public sector lenders Canara Bank (+3.59%), Punjab National Bank (+1.67%) and Union Bank (+1.03%) gained, while Bank of Baroda (-3.96%), ICICI Bank (-1.59%) and HDFC Bank (-0.46%) weighed on the index.

The index closed just below its 21-day simple moving average (SMA) of 55,379, keeping the short-term outlook neutral to cautious. A close above 55,650 would be needed to signal a more durable rebound.

The 14-day relative strength index (RSI) stands at 46.71, having recovered from near-oversold levels of around 32 in late September. It is above its signal average of 38.39 but remains below 50. The moving average convergence divergence (MACD), at -427.02, has crossed above its signal line at -529.88, with the histogram turning positive at +102.87. This bullish crossover suggests bearish momentum is fading, but does not yet confirm a trend reversal, as the indicator remains below zero.

The 50-day SMA is slipping below the 100-day SMA, a negative technical signal. A stronger recovery would require the RSI to sustain levels above 50 and the MACD to move towards zero.

Immediate support lies at 55,170, near Wednesday’s low, followed by 54,500 and the September swing low near 53,800. Resistance is at 55,650, followed by 56,000 and the 56,550-56,950 zone, where the 50-day, 100-day and 200-day SMAs are clustered.

Foreign investors sold ₹1,305 crore of equities on 13 October, while domestic institutions bought ₹2,439 crore. The Reserve Bank of India’s 25-basis-point rate hike to 5.50% and stricter daily cash reserve ratio (CRR) maintenance requirements from 16 October are adding to liquidity pressures. Bank of Baroda shares also fell amid the $15 billion lawsuit involving BR Shetty.

Until HDFC Bank and ICICI Bank report their September-quarter results on 17 October, the Nifty Bank is expected to trade in a range of 54,500-56,000. A close above 56,000 could open the way towards 56,900.

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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