Stock recommendations for 26 October from MarketSmith India

Stock market recap: Indian equities extended their losing streak to a fourth straight session on Friday, as crude oil prices nearing $114 per barrel, renewed foreign selling, and a global selloff in technology stocks weighed on sentiment. Nifty 50 fell 87.65 points, or 0.39%, to close at 22,600, after sliding to an intraday low of 22,372, while Sensex slipped 125.56 points, or 0.17%, to settle at 73,123.83.

Both indices recovered sharply from the day's lows in the afternoon, led by IT stocks. For the week, Nifty lost about 2.4%. IT was the best-performing sector, with TCS, Infosys, HCL Tech, and Tech Mahindra rising, as investors bought Indian software firms despite overnight losses in U.S. tech giants such as Meta and Nvidia. Metals and Realty were the weakest sectors, with Tata Steel and Hindalco falling about 3% each, while Tata Motors Passenger Vehicles, Jio Financial Services, and NTPC also declined.

The Bank Nifty fell 1.16%. Selling was far heavier in midcap and smallcap stocks, and breadth was deeply negative, with only 624 stocks advancing, 3,011 stocks declining, and 89 remaining unchanged. Crude oil, foreign flows, and quarterly earnings will remain in focus next week.

Two stock recommendations by MarketSmith India:

Buy: Garware Hi-Tech Films Limited (current price: ₹7040)

• Why it’s recommended: Strong demand for high-margin specialty films such as Paint Protection Films (PPF), solar control and architectural films, supported by ongoing capacity expansion and backward integration initiatives. Increasing export footprint and premiumization of product portfolio, with specialty films contributing a growing share of revenue and driving margin expansion.
• Key metrics: P/E: 36.31, 52-week high: ₹7,990.00, volume: ₹169.43 crore
• Technical analysis: Reclaimed its 200-EMA
• Risk factors: High dependence on global markets and export revenues exposes the company to tariff changes, trade restrictions, currency fluctuations, and overseas demand slowdowns. Raw material price volatility and rising competition from global film manufacturers could pressure margins and market share.
• Buy: ₹6,970-7,075
• Target price: ₹8,200 in two to three months
• Stop loss: ₹6,500

Buy: Nazara Technologies Limited (current price: ₹402)

• Why it’s recommended: Expansion of its global gaming platform through acquisitions, proprietary gaming IPs, and strong growth in businesses such as Kiddopia, Fusebox Games, and Animal Jam. Benefiting from the rapid growth of the gaming and esports industry, supported by improving monetization, operating leverage, and AI/data-driven user acquisition capabilities.
• Key metrics: P/E: 17.10, 52-week high: ₹419.90, volume: ₹128.41 crore
• Technical analysis: Bounced from its 50-EMA
• Risk factors: Acquisition-led growth strategy increases integration, execution, and capital allocation risks, particularly with large overseas transactions. Gaming revenues are dependent on the sustained popularity of key titles/IPs and are exposed to changing consumer preferences and platform policies.
• Buy at: ₹398–404
• Target price: ₹480 in two to three months
• Stop loss: ₹373

How the Nifty 50 performed on 23 October

Indian equity markets ended Friday's session on a weak note, with Nifty 50 declining 87.65 points (0.39%) to 22,600.00, compared with its previous close of 22,687.65. The benchmark opened at 22,742.20, touched an intraday high of 22,787.25, and fell to a low of 22,372.00 before recovering sharply from lower levels. Selling pressure was broad-based across sectors, led by Nifty Metal (-2.71%), Consumer Durables (-2.63%), Realty (-2.38%), and PSU Bank (-2.26%), while IT (-0.27%) and Auto (-0.60%) demonstrated relative resilience. Overall market breadth remained decisively negative, with 624 stocks advancing, 3,011 stocks declining, and 89 remaining unchanged. This translates into an advance-decline ratio of approximately 1:4.8, indicating widespread selling pressure beyond the benchmark index.

The index formed a bearish daily candle with a pronounced lower shadow, reflecting buying interest at intraday lows, although selling pressure at higher levels remains evident. Price action continues to follow a pattern of lower-highs and lower-lows, reinforcing the prevailing downtrend. The index remains below its key moving averages, while the broader descending trendline continues to indicate sustained bearish sentiment. The Relative Strength Index (RSI) stands at 42.38, below the neutral 50 mark, suggesting weak momentum despite its recovery from oversold territory. Meanwhile, the MACD remains in negative territory, with the MACD line (-169.46) above the signal line (-222.63) and a positive histogram of 53.17, indicating improving short-term momentum.

Nifty 50 continues to show a bearish bias, having slipped below its 21-day moving average (21-DMA) and formed a Doji candlestick, indicating market indecision amid persistent selling pressure. Technically, 22,600–22,500 remains a key 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 fell for a fourth straight session on Friday, losing 638.35 points, or 1.16%, to close at 54,287.35, as high crude oil prices and renewed foreign selling kept pressure on financial stocks. The index slipped below 54,000 to an intraday low of 53,942.35 before recovering part of its losses. Selling was broad-based, with 13 of the 14 constituents ending lower. Public sector banks were hit hardest, led by Canara Bank, which fell nearly 4%, while Bank of Baroda and Union Bank lost more than 2%, each. PNB and SBI declined between 1% and 2%. Among private lenders, IDFC First Bank dropped about 3.5%, while AU Small Finance Bank, Federal Bank, and IndusInd Bank fell around 2% each. Kotak Mahindra Bank lost about 1.5% ahead of its quarterly results on Saturday. HDFC Bank and ICICI Bank ended only slightly lower, limiting the damage, while Axis Bank was the lone gainer, rising about 0.5%. Kotak's results and other bank earnings will guide the index next week.

Nifty Bank extended its bearish momentum, reflecting sustained selling pressure across banking stocks. The index formed a strong bearish daily candle with a lower shadow, indicating aggressive selling throughout the session despite some buying interest near the intraday lows. Price action continues to exhibit a lower-high and lower-low price structure, reinforcing the prevailing downward trend. The index remains below its key short- and long-term moving averages, while the descending trendline highlights persistent weakness in the broader technical structure. The Relative Strength Index (RSI) declined to 37.73, slipping below its signal average of 43.83, indicating deteriorating momentum and strengthening bearish sentiment. Meanwhile, the MACD remains in negative territory, with the MACD line (-328.90) marginally above the signal line (-351.40) and a positive histogram reading of 22.50.

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 at 55,100 is the first hurdle, followed by 55,900–56,000 and the 50 SMA (56,320). The 100 and 200 SMA cluster at 56,680–56,870 remains a strong ceiling.

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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