Stock recommendations for 2 September from MarketSmith India

Stock market recap: Benchmark stock indices Sensex and Nifty ended marginally lower on Tuesday as high crude oil prices and fresh US-Iran tensions weighed on investor sentiment.

After a volatile session, the 30-share BSE Sensex ended 12.99 points, or 0.02%, lower at 76,944.28. The benchmark had fallen as much as 301.15 points, or 0.39%, to 76,656.12 during the day. At 3:12 pm, it was down 271.79 points at 76,685.48, before recovering most of its losses during the Closing Auction Session (CAS), introduced by the Securities and Exchange Board of India (Sebi) from 3 August in a phased manner, according to the Press Trust of India .

The 50-share NSE Nifty slipped 24.60 points, or 0.10%, to end at 24,055.80 on the weekly expiry day. It was down nearly 100 points at 23,980.55 at 3:20 pm, according to the PTI report.

Among the 30 Sensex constituents, Maruti, State Bank of India, InterGlobe Aviation, Bajaj Finserv, Mahindra & Mahindra and Axis Bank were the major laggards.

Buy: Gandhar Oil Refinery (India) Ltd (current price: ₹ 262)

Indian equities ended a volatile session on a subdued note on 1 September, with the Nifty 50 at 24,055.80, down 24.60 points or 0.10%, after moving between 23,952.55 and 24,143.15. The index recovered sharply from afternoon lows but remained below the previous close of 24,080.40. Market breadth was notably weak, with 1,345 stocks advancing, 2,196 stocks declining, and 108 remaining unchanged, translating into an advance-decline ratio of roughly 0.61, indicating broader selling pressure despite the modest headline-index decline.

Sector-wise, IT (+0.98%) and FMCG (+0.94%) provided support. Meanwhile, Healthcare (-1.60%), Pharma (-1.45%), Realty (-1.42%), Consumer Durables (-1.40%), Auto (-1.22%), and PSU Banks (-1.21%) remained under pressure. Stronger-than-expected domestic economic growth and a firmer rupee supported sentiment earlier in the session, although weak global cues and recent heavy FII selling kept risk appetite restrained.

During the session, the index briefly breached both its rising trendline and the 100-DMA. However, it recovered to close above them, suggesting that the broader uptrend remains intact for now despite increasing selling pressure. However, the index continues to trade below its shorter-term moving averages, reflecting a loss of momentum following the recent decline.

Although it is still comfortably above oversold territory, the RSI has slipped to 43 and remains below its signal average of 47, indicating weakening momentum. Meanwhile, the MACD remains in negative territory, with the MACD line below the signal line and a negative histogram, reinforcing the cautious short-term setup.

Nifty 50 has breached its 50-day moving average (DMA), indicating some deterioration in near-term momentum. Although the index continues to hold above its upward-sloping trendline, keeping the broader recovery structure intact for now.

On the downside, a decisive break below 24,100–24,000 would weaken the prevailing technical setup and could extend the corrective move toward 23,900–23,800. Conversely, on the upside, the 21-DMA near 24,400 is likely to act as the immediate hurdle. A sustained close above this level would signal improving short-term momentum and could pave the way for a broader recovery toward 24,700, where the 200-DMA is currently positioned.

Bank Nifty extended its retreat on Tuesday, giving back a large part of Monday's gains as profit booking hit frontline lenders. The index fell 615.35 points, or 1.06%, to close at 57,409.60, pulling back sharply after settling at a fresh high in the previous session. Axis Bank, SBI, and IndusInd Bank led the decline, each falling more than 2%, while Yes Bank and Union Bank of India slipped over 2.5%. ICICI Bank and Federal Bank also extended losses, adding further pressure on the index. HDFC Bank held up relatively well, ending nearly flat.

Meanwhile, Kotak Mahindra Bank and Punjab National Bank were among the few gainers, up around 1-2%. The pullback in banking stocks came even as the broader Nifty 50 and Sensex ended nearly flat, supported by strong domestic GDP data. The underperformance in financials reflected sector-specific profit booking after Monday's closing-auction-driven rally, alongside continued caution around elevated crude oil prices and U.S.-Iran tensions.

Nifty Bank ended at 57,409.60, down 1.06%, forming a bearish daily candle and extending the recent consolidation phase. Price action has turned mildly negative, with the index closing below the cluster of short- and medium-term moving averages, while remaining above the longer-term average. The broader recovery structure from the April lows remains intact, but recent candles indicate a loss of upward momentum and an increasingly sideways trend. RSI stands at 48.34, below its signal average of 50.72 and marginally below the neutral 50 mark, reflecting weakening momentum without indicating an oversold condition. MACD is largely flat with a mildly negative histogram, suggesting that bullish momentum has faded and directional strength remains limited.

Immediate support is placed around 57,665–57,450, corresponding to the 21-, 50-, and 200-DMA cluster. A close below this zone could expose 57,187, followed by stronger support near the 100-DMA at 56,457. On the upside, 58,025–58,150 is the immediate resistance band.

A decisive breakout could open the path toward 58,500–58,700. Banking heavyweights provided market support, although HDFC Bank’s leadership-transition developments may create stock-specific volatility. Meanwhile, higher crude oil prices amid renewed geopolitical concerns could restrict broader risk appetite. The near-term bias remains cautiously positive while the index holds above 57,450, with stronger upside confirmation emerging only above 58,150.

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.

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.

MarketSmith India breaks through the market clutter to bring actionable investment ideas into focus. Our founder and legendary investor, William J. O'Neil, studied these trends and formulated the pathbreaking methodology, the CAN SLIM®. For over five decades now, MarketSmith has been successfully delivering great investment ideas based on its investment philosophy.

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