Stock recommendations for 28 October from MarketSmith India

Stock market recap: Benchmark indices Sensex and Nifty ended largely unchanged in volatile trade on Tuesday as profit-taking in IT and blue-chip banking stocks, high crude oil prices and caution ahead of the US Federal Reserve’s policy decision kept investors on edge.

The Sensex fell 8.08 points, or 0.01%, to close at 73,598.67, while the Nifty shed 3.45 points, or 0.02%, to settle at 22,749.75.

Broader markets, however, outperformed the benchmarks on strong buying interest. The BSE smallcap index rose 2.59%, while the midcap index gained nearly 1%. Sector-wise, realty, pharma and auto stocks advanced, while banking, financial services and IT shares declined.

Among Sensex constituents, State Bank of India, Axis Bank, Tata Consultancy Services, Asian Paints, HDFC Bank and ICICI Bank were among the major laggards. Bharti Airtel, Trent, Maruti Suzuki and Power Grid were among the top gainers.

Buy: Tips Music Ltd (current price: ₹741.6)

• Why it’s recommended: Strong monetization of its extensive music catalog through rising digital streaming, YouTube, OTT, and licensing revenues, creating a scalable royalty-led business model. Growing demand for music licensing, synchronization rights, and regional content across digital platforms supports long-term royalty income growth.
• Key metrics: P/E: 40.13, 52-week high: ₹785.00, volume: ₹34.76 crore
• Technical analysis: Consolidation-based pattern breakout
• Risk factors: High dependence on digital platforms and changing royalty-sharing policies could impact revenue realization from content monetization. Intense competition from major music labels and the need for sustained content acquisition may pressure market share and margins.
• Buy: ₹734–745
• Target price: ₹860 in two to three months
• Stop loss: ₹699

Buy: Acutaas Chemicals Ltd (current price: ₹3,793)

• Why it’s recommended: Expanding presence in high-value specialty chemicals, semiconductor chemicals, battery materials, and pharma intermediates diversifies revenue streams and improves growth visibility. Strong R&D capabilities, a global customer base, and growing CDMO opportunities position the company to benefit from import substitution and demand in specialty chemical.
• Key metrics: P/E: 70.78, 52-week high: ₹3,900.00, volume: ₹1,736.95 crore
• Technical analysis: T-consolidation-based pattern breakout
• Risk factors: Significant exposure to pharmaceutical and specialty chemical end-markets makes earnings vulnerable to demand slowdown, regulatory issues, or customer concentration. Execution risks in scaling new businesses such as semiconductors, battery chemicals, and CDMO projects could affect profitability and return ratios.
• Buy at: ₹3,755–3,812
• Target price: ₹4,200 in two to three months
• Stop loss: ₹3,600

How Nifty 50 performed

Indian equity markets ended Tuesday on a mixed note, with the Nifty 50 slipping 3.45 points, or 0.02%, to close at 22,749.75 after a volatile session. The index opened at 22,708.80, touched an intraday high of 22,829.75 and a low of 22,636.85, before recovering from lower levels towards the close.

Broader market sentiment remained positive, with 2,455 stocks advancing, 1,103 declining and 107 unchanged, translating into an advance-decline ratio of 2.23:1. Sectoral gains were led by Media (3.66%), Realty (1.94%), Pharma (1.91%), Healthcare (1.65%) and Auto (1.48%). However, losses in Private Banks (0.73%), Financial Services (0.59%) and IT (0.26%) weighed on the benchmark.

Technical outlook

The Nifty 50 formed a small bullish candle on the daily chart, indicating buying interest at lower levels despite continued volatility. The broader technical structure remains cautious, with the index trading below key medium- and long-term moving averages and a descending trendline, suggesting the prevailing downtrend remains intact despite recent recovery attempts. However, the index has reclaimed its short-term moving average near 22,700, pointing to early signs of stabilization.

The Relative Strength Index (RSI) has recovered to 46, above its signal average of 42.25, indicating improving momentum, although it remains below the neutral 50 mark. The Moving Average Convergence Divergence (MACD) has also registered a bullish crossover, with the MACD line at -146.04 moving above the signal line at -196.84. The positive histogram points to strengthening upward momentum.

Key levels to watch

The Nifty 50 rebounded sharply from intraday lows and closed above its 21-day moving average, signalling renewed buying interest and improving near-term sentiment.

On the downside, 22,500–22,400 remains a key support zone. A decisive break below this range could trigger fresh selling pressure, pulling the index towards 22,200–22,000. On the upside, the 23,000–23,200 range is likely to act as a significant resistance zone following the recent breakdown from these levels.

How did the Nifty Bank perform?

The Nifty Bank underperformed the broader market on Tuesday, falling 391.80 points, or 0.72%, to close at 53,974.90, just above its intraday low of 53,951.20. Selling in private-sector heavyweights outweighed gains in state-run lenders, dragging the index below 54,000 in the final hour as investors stayed cautious ahead of the US Federal Reserve’s policy decision on Wednesday.

ICICI Bank, down 1.2%, was the biggest drag, while HDFC Bank and Axis Bank each fell more than 1%. SBI declined about 1.6%, and IndusInd Bank lost around 1.3%. AU Small Finance Bank extended its post-results slide, falling about 2.4%, while Federal Bank and IDFC First Bank also ended lower.

Public-sector banks bucked the trend, led by Union Bank, which gained nearly 2%, and Canara Bank, which rose more than 1%. Bank of Baroda and Punjab National Bank posted smaller gains, while Kotak Mahindra Bank edged higher. Market breadth remained weak, with six gainers and eight decliners. The Fed decision is likely to influence near-term sentiment in banking stocks.

Technical outlook

The Nifty Bank formed a bearish candle on the daily chart, reflecting sustained selling pressure after its recent recovery attempt. The index continues to form lower highs and lower lows and trades below its key short-, medium- and long-term moving averages, signalling a weakening price structure. The descending trendline reinforces the bearish bias, suggesting the broader downtrend remains intact.

The Relative Strength Index (RSI) stands at 35.66, below its signal average of 43.59, indicating weakening momentum and mounting selling pressure as the indicator approaches oversold territory. The Moving Average Convergence Divergence (MACD) remains in negative territory, with the MACD line at -418.46 below the signal line at -366.81. The negative histogram reading of -51.65 points to renewed bearish momentum.

Key levels to watch

The index remains technically weak, with the current support zone critical to near-term stability. A decisive break below it could intensify selling pressure, dragging the index towards 53,000 and then 52,700.

On the upside, the 21-day simple moving average (SMA), near 55,000, is likely to act as the immediate hurdle, followed by a significant resistance zone at 55,900–56,000.

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.

Trade name: William O’Neil India Pvt. Ltd.

Sebi Registration No.: INH000015543