Stock recommendations for 23 October from MarketSmith India

Indian equities extended losses for a second straight session on Thursday as crude oil prices stayed above $110 per barrel and rising tensions in West Asia raised inflation concerns for India's oil-dependent economy. Nifty 50 fell 123.70 points, or 0.54%, to close at 22,687.65, after slipping to an intraday low of 22,554.85, while Sensex declined 460.30 points, or 0.62%, to settle at 73,249.39.

The indices recovered from the day's lows, helped by steady banking stocks, with the Bank Nifty ending nearly flat. Media, FMCG, and defence stocks were among the weakest, while IT reversed part of Wednesday's rally, with HCL Tech and Tech Mahindra among the major losers. Nestle India, Coal India, and Power Grid also declined, while Larsen & Toubro, Bharti Airtel, and ICICI Bank offered support.

Quarterly results drove sharp moves in individual stocks, with KEI Industries, Swiggy, and M&M Financial falling 6–8%, while Indian Hotels gained more than 4%. Breadth was clearly negative, with 1,026 stocks advancing, 2,512 stocks declining, and 104 remaining unchanged. Crude oil prices, West Asia developments, and the Jio IPO will remain in focus.

Two stock recommendations by MarketSmith India

Buy: The Indian Hotels Company Limited(current price: ₹784.5)

• Why it’s recommended: Strong domestic travel demand, weddings, business travel, and favorable demand-supply dynamics are supporting higher occupancy and room rates. Asset-light expansion strategy, premium Taj brand strength, and an aggressive hotel pipeline targeting 700+ hotels drive long-term growth.
• Key metrics: P/E: 49.52, 52-week high: ₹794.65, volume: ₹1,644.69 crore
• Technical analysis: Flat base pattern breakout
• Risk factors: Hospitality demand is cyclical and vulnerable to economic slowdowns, geopolitical disruptions, and declines in discretionary travel spending. Rising employees, utility, and operating costs, along with execution risks in rapid expansion, may pressure margins.
• Buy: ₹777–788
• Target price: ₹900 in two to three months
• Stop loss: ₹743

Buy: ICICI Bank Limited (current price: ₹1,398)

• Why it’s recommended: Strong retail, SME and business banking loan growth, supported by a large deposit franchise, continues to drive earnings growth. Industry-leading digital platforms, technology-led customer acquisition and improving asset quality support sustainable profitability.
• Key metrics: P/E: 16.84, 52-week high: ₹1,480.00, volume: ₹2,238.69 crore
• Technical analysis: Reclaimed 100 DMA
• Risk factors: Margin pressure from intense deposit competition, changing interest rate cycles, and funding cost increases can impact profitability. Economic slowdown or stress in retail/corporate credit portfolios could lead to asset quality deterioration and higher credit costs.
• Buy at: ₹1,384–1,405
• Target price: ₹1,540 in two to three months
• Stop loss: ₹1,340

How the Nifty 50 performed on 22 October

Indian equity markets ended Thursday's session on a weak note, with Nifty 50 declining 123.70 points (0.54%) to 22,687.65, compared with its previous close of 22,811.35. The benchmark witnessed considerable intraday volatility, trading between 22,554.85 and 22,785.00, before recovering partially from its lows.

Broader market sentiment remained distinctly negative, with 1,026 stocks advancing, 2,512 stocks declining, and 104 remaining unchanged. This translates into an advance-decline ratio of approximately 0.41:1, indicating widespread selling pressure. Sectoral performance was predominantly weak, led by Nifty Media (-2.35%), FMCG (-1.41%), IT (-1.05%), Consumer Durables (-0.96%), and Oil & Gas (-0.86%). However, selective buying emerged in Pharma (+0.12%), PSU Banks (+0.07%), and Healthcare (+0.05%), providing limited support.

Nifty 50 closed at 22,687.65, declining 123.70 points (-0.54%), as selling pressure resurfaced following the recent recovery. The daily price structure continues to reflect a broader bearish trend, characterized by lower-highs and lower-lows. The index remains below its key moving averages and the descending long-term trendline, indicating the downtrend remains intact. The latest bearish candle, following a short-term rebound, suggests renewed selling interest at higher levels and highlights the lack of sustained buying momentum.

The Relative Strength Index (RSI) stands at 43.98, below the neutral 50 mark, reflecting subdued momentum despite recovering from oversold territory. Meanwhile, the MACD remains in negative territory. However, the MACD line (-167.07) is positioned above the signal line (-235.92), while the positive histogram suggests improving underlying momentum.

Nifty 50 continues to exhibit a bearish bias, having slipped below its 21-day moving average (21-DMA) and formed a Doji candlestick, indicating indecision amid persistent selling pressure. Technically, 22,600–22,500 remains a crucial support area, and a decisive breakdown below this range could intensify selling pressure, potentially extending the decline toward 22,200–22,000. On the upside, 23,000–23,200 is expected to act as key resistance, after the recent breakdown.

How did Nifty Bank perform?

Nifty Bank opened on a negative note at 54,734.45, a gap-down of 0.44% that tracked weak global cues. After slipping to an intraday low of 54,459.35, it rebounded on buying at lower levels, touched a high of 55,134.45, and closed at 54,925.70, down a marginal 51.20 points or 0.09%. The session formed a small bullish-bodied candle with a long lower shadow, which shows buyers defending 54,450, though the index stayed below its 21-SMA.

Among heavyweights, ICICI Bank (+0.97%), SBIN (+0.73%), and Axis Bank (+0.17%) gained, while HDFC Bank (−1.82%), Bank of Baroda (−0.40%), and Kotak Bank (−0.18%) dragged. HDFC Bank slipped toward its 52-week low amid an internal probe into alleged information leaks. Federal Bank led the gainers at 1.10%, while Yes Bank was the weakest constituent at −2.19%.

The RSI (14) stands at 43.05. It slipped below its signal line at 43.48 after failing to hold above 50 last week, indicating fading momentum and a mildly bearish bias. The MACD line at −271.33 remains above its signal line at −357.02, so the early-October bullish crossover is still intact. However, the histogram at 85.69 is narrowing, and both lines are below zero, which signals a weak trend. The index trades below all four key SMAs, and the 50-SMA is below the 200-SMA, so the broader structure stays negative. A sustained RSI move above 50 is needed to confirm a trend reversal.

Immediate support lies at 54,450, the day's low, followed by 53,800–54,000, the early-October swing low. A breach of this zone could extend the decline toward 53,000. On the upside, the 21-SMA (55,190) is the first hurdle, followed by 55,900–56,000 and the 50 SMA (56,320). The 100 and 200SMA cluster at 56,680–56,870 and remain a strong ceiling.

Brent crude near $110, elevated US bond yields, the RBI's shift to calibrated tightening, and governance concerns at HDFC Bank keep risks tilted lower. The index is therefore likely to stay range-bound with a negative bias in the coming sessions. Only a decisive close above 55,190 would revive bullish momentum.

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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