According to experts, the decline was influenced by profit-taking in anticipation of the Union Budget, a significant drop in commodity prices, and weak signals from global markets, which collectively led to a cautious investor sentiment.

Investors will now focus on the Union Budget scheduled for Sunday, 1 February. The markets will function in a special trading session.

Two stock recommendations by MarketSmith India for 1 February:

Buy: CreditAcesss Grameen Ltd (current price: ₹1,329)

• Why it’s recommended: Business is highly sensitive to asset quality and credit cost cycles. Exposure to rural/low-income borrowers, with inherent credit risk. Competitive threat from digital lenders and fintech NBFCs. Regulatory and RBI policy risks for NBFC-MFIs. Valuation volatility with high price multiples. Dependence on external funding and the interest rate environment. Operational risks in rapid branch expansion and scaling asset quality.
• Key metrics: P/E: 41.83, 52-week high: ₹1,496.70, volume: ₹249.67 crore
• Technical analysis: Trendline breakout and retest
• Risk factors: Leader in microfinance, with a deep rural network and scale across Indian markets. Strong growth in AUM and disbursements, with an expanding borrower base. Focus on financial inclusion and women borrowers is expected to drive stable demand. Diversified loan products, including micro, gold, two-wheeler, and housing loans. Asset quality is improving, reflected in a reduction in PAR and better collections. Institutional funding and syndicated loans boost liquidity and growth potential. Long-term growth runway in underserved rural credit markets.
• Buy: ₹1,320–1,345
• Target price: ₹1,550 in two to three months
• Stop loss: ₹1,240

Buy: Star Health and Allied Insurance Co. Ltd (current price: ₹470)

• Why it’s recommended: Largest standalone health insurer in India, with a strong retail market share. Wide branch network and distribution, with 800+ branches and a large hospital network. Growing premium income and improved underwriting performance. High policy persistency and improving claim settlement metrics. Rising health insurance penetration supports long-term demand. Reinvesting profits back into the business, that support growth potential. Broad product suite, including retail, family, personal, and travel insurance.
• Key metrics: P/E:59.41, 52-week high: ₹534.00, volume: ₹134.63 crore
• Technical analysis: 50-DMA retake
• Risk factors: Profitability and underwriting results can fluctuate significantly from quarter to quarter. Historically, high claim ratios can pressure margins. No regular dividends; returns depend on reinvestment success. Regulatory scrutiny and compliance risks in the insurance sector (general industry risk). Reputation and operational risk from customer disputes and legal rulings. Competitive pressure from other insurers and digital platforms. Sensitivity to economic cycles affecting premium growth and renewals.
• Buy at: ₹465–475
• Target price: ₹530 in two to three months
• Stop loss: ₹440FPIs

Nifty 50 recap | 30 January

Indian equities closed modestly lower on Friday, with Nifty 50 ending at 25,320.65, down 98.25 points, or 0.39%, after a volatile intra-day session. The benchmark oscillated within 25,213–25,371, recovering from mid-session weakness but failing to sustain above the previous close of 25,418, reflecting cautious sentiment.

Market breadth, however, remained supportive, with 1,829 stocks advancing against 1,325 declines, indicating selective buying beneath the surface despite the headline index pressure. Sectoral performance was mixed. FMCG, Consumer Durables, Healthcare, and Pharma stocks outperformed, aided by defensive buying and stock-specific triggers. Meanwhile, Auto and Media also posted gains. In contrast, Metals were the sharpest laggard, weighed down by global commodity concerns, while IT and Financials saw continued profit-taking amid valuation worries and muted global cues. Within Financials, both private banks and broader financial services indices underperformed.

From a technical perspective, Nifty 50 ended the session with a constructive rebound after recent corrective pressure, reflecting improving price action on the daily chart. The index formed a strong recovery candle, indicating buying interest emerging at lower levels after a sharp sell-off earlier in the week. Despite this bounce, the broader price structure suggests the index remains in a corrective phase within the medium-term uptrend, with recent candles highlighting heightened volatility and indecision. Momentum indicators also echo this moderation. The RSI has drifted lower and is hovering in the low-40s zone, staying below its average and reflecting weakening bullish strength without entering deeply oversold territory. This suggests limited downside acceleration but also a lack of strong buying interest. The MACD remains in bearish territory, with the signal line below zero and the histogram continuing to show negative bars, indicating that downside momentum, though moderating, persists.

According to O’Neil’s methodology of market direction, Nifty 50 remains in a Downtrend. From a tactical standpoint, traders should remain selective and prioritize risk management.

The index delivered a constructive close by reclaiming its 200-DMA and staging a decisive bounce from the key support zone around 24,900, reinforcing the near-term stability of the trend. On the downside, 24,900–25,000 is expected to act as an immediate cushion, while any deeper corrective phase is likely to attract incremental buying interest closer to 24,600. On the upside, the index is expected to remain range-bound amid elevated volatility, with near-term price action broadly confined within 24,900–25,600. Market participants are likely to adopt a cautious, data-dependent approach as they await clearer directional cues from macroeconomic developments and global market trends.

Nifty Bank performance | 30 January

On Friday, Nifty Bank opened on a negative note, reflecting a cautious market sentiment. The index dipped to an intraday low of 59,383.70 before recovering. However, after hitting an intraday high of 59,906.90, it faced resistance, with profit booking at the higher levels, and ultimately closed lower at 59,542.25. The index showed resilience by bouncing off the low, but could not maintain its strength at higher levels. This suggests that the index is witnessing recovery attempts, market sentiment remains cautious, reflecting indecisiveness and volatility.

The RSI is currently at 52, indicating a neutral stance, as it has not yet breached 60, which would signal strong bullish momentum. The MACD, with its positive crossover, is in favor of the bulls, though it remains below the neutral line. This suggests that the momentum is gradually building, but it’s not yet in full force. According to O’Neil’s methodology of market direction, Nifty Bank is in an Uptrend Under Pressure. A positive MACD crossover signals potential for upward movement, but the market may remain volatile in the short term.

The immediate support for Nifty Bank is at 59,380, with the next key level at 57,900. Resistance is positioned around 59,906.90, with additional upside potential at 60,000. The upcoming price action will be critical; sustained movement above the 50-DMA of 59,380 could indicate further upward momentum. However, failure to breach the 60,000 resistance level may result in a consolidation phase or a potential pullback. If the resistance is surpassed, the index could then move within the range of 60,500 to 61,000 in the coming days.

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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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.