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On Tuesday, 15 July, the Nifty 50 gained 0.45% supported by a sharp drop in retail inflation to 2.10% in June—the lowest since January 2019—and raising hopes for potential rate cuts. Positive global cues and optimism around renewed US-India trade discussions further bolstered sentiment. 

Technically, the index triggered fresh buying interest and helped reverse Monday’s losses. Gains were broad-based, with support from auto, FMCG, and banking stocks, indicating renewed investor confidence amid improving macro and trade developments.

Here are two stock recommendations by MarketSmith India for 16 July:

On Tuesday, the benchmark Nifty 50 index reversed its recent corrective trend, finding support near 25,000. After a flat opening, the index maintained a positive trajectory throughout the session and formed a bullish candlestick on the daily chart with a ‘higher-high and higher-low’ price structure. Gains were broad-based, with all sectoral indices and broader market segments closing in the green. 

The rally was primarily driven by banking/financials, auto, pharma, FMCG, and realty stocks. As a result, market breadth improved significantly, with the advance-decline ratio settling at 2:1.

Despite Tuesday’s recovery, the Nifty 50 continued to trade below its 21-DMA, suggesting near-term caution. On the daily timeframe, the relative strength index (RSI) has turned upward and is now approaching 51, indicating a mild improvement in momentum. However, the daily MACD continues to trend with a negative crossover above the zero line, reflecting the absence of strong bullish confirmation.

According to O'Neil’s methodology of market direction, Nifty reclaimed its recent high of 25,116. Hence, the market status has been upgraded to a ‘Confirmed Uptrend’ as of 11 June.

On the downside, 25,000-24,900 remains a critical support area. For the Nifty to regain bullish momentum, a decisive breakout and sustained close above 25,300 is essential. Sustained trading above 25,300 could potentially open the path toward the 25,600-25,700 resistance zone in the coming sessions.

On Tuesday, the Nifty Bank index resumed its upward trajectory, gaining approximately 0.43% and forming a bullish candlestick on the daily chart. The index reclaimed 57,000, recovering from recent declines. The positive momentum was primarily driven by heavyweight constituents such as HDFC Bank, ICICI Bank, and State Bank of India, while Kotak Bank and Axis Bank ended the session in negative territory. 

A sustained move above the critical 57,000 level could strengthen the bullish bias and potentially drive the Nifty Bank index towards 57,200, with an extended upside target near 57,500 in the near term. However, failure to hold above 57,000 may lead to a volatile trend. On the downside, strong support is expected around 56,600-56,500, which may act as a cushion against short-term declines.

The FINNIFTY index also reflected signs of recovery, closing with a 0.47% gain, supported by renewed buying interest across key financial stocks. The index found support near its 21-DMA and regained bullish momentum, reflecting a potential shift in short-term sentiment. 

On the daily chart, the relative strength index (RSI) has turned upward, indicating improving momentum. However, the MACD continues to display a negative crossover, albeit trending above the zero line, suggesting that a clear bullish confirmation is yet to emerge.

As per O’Neil’s methodology of market direction, Bank Nifty remains a ‘Confirmed Uptrend’, a trend it has sustained over the past few weeks.

MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. Trade name: William O'Neil India Pvt. Ltd. (Sebi Registered Research Analyst Registration No.: INH000015543)

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 making any investment decisions.

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