Indian stock markets witnessed another day of significant selling pressure on Thursday, with benchmark indices extending their losses for the fourth consecutive session. In this volatile environment, research platform MarketSmith India has identified two stocks for potential investment on 9 January.
Market Recap: A Broad-Based Sell-Off
The trading session on 9 January was challenging for investors. The Nifty 50 index fell nearly 1%, closing sharply lower at 25,884.15, decisively breaching the key psychological level of 26,000. The BSE Sensex plummeted over 700 points to settle at 84,277.00.
Market sentiment took a severe hit due to heightened geopolitical tensions and renewed trade concerns. Reports suggesting the U.S. administration might impose steep tariffs on Indian goods linked to Russian energy imports triggered a widespread sell-off. The Metals and Oil & Gas sectors were among the hardest hit, while IT and Auto stocks also faced substantial pressure.
The market breadth was decisively weak, reflecting the broad nature of the decline. The advance-decline ratio stood at a poor 0.16x, meaning only one stock advanced for every six that declined.
MarketSmith India's Stock Recommendations
Despite the gloomy market mood, MarketSmith India's analysis, based on William J. O'Neil's CAN SLIM methodology, has pinpointed two stocks with potential for investors.
Bharat Electronics Ltd (BEL)
MarketSmith India recommends a buy on Bharat Electronics Ltd (BEL) in the price range of ₹410–420. The stock's current market price is around ₹415. The advisory has set a target price of ₹450 for a horizon of two to three months, with a stop loss at ₹398.
The recommendation is based on the company's strong order book driven by defence and government contracts. BEL holds strategic importance in India's push for defence indigenisation. The firm has demonstrated consistent revenue and profit growth across market cycles, supported by a healthy balance sheet with low debt and robust cash flows. Long-term visibility is aided by repeat orders and contracts of extended duration.
Key metrics for BEL include a P/E ratio of 55.58 and a 52-week high of ₹436. The technical analysis indicates a trendline breakout. Investors should note risk factors such as high dependence on government spending, potential order execution delays, limited diversification outside defence electronics, and sensitivity to policy or budget changes.
IDFC First Bank Ltd
The second pick is IDFC First Bank Ltd, with a buy recommendation in the range of ₹85–86.50. The stock is currently trading near ₹86. The target price is set at ₹93 for the next two to three months, with a stop loss advised at ₹82.9.
The rationale for this selection includes the bank's improving asset quality with a decline in non-performing assets (NPAs). IDFC First Bank has shown strong growth in retail deposits and loans, and a rising CASA ratio, which supports lower funding costs. The bank's profitability metrics have shown consistent improvement, and it maintains a well-capitalised balance sheet.
The bank's P/E ratio is 55.76, and its 52-week high is ₹87. The technical pattern shows a flat base breakout. Potential risks involve pressure on net interest margins due to interest rate cycles, higher credit costs in unsecured lending, intense competition from larger private banks, and sensitivity to an economic slowdown.
Technical Outlook and Market Status
The Nifty 50's price action shows a clear loss of momentum, with the index forming a bearish candle and closing near the day's low. It has breached its 50-day moving average (50-DMA) and the 26,000 mark. The Relative Strength Index (RSI) has drifted lower into the mid-40s to low-50s, suggesting weakening bullish strength. The MACD indicator is flattening, highlighting a slowdown in trend momentum.
According to O'Neil's methodology, the market status remains a 'Confirmed Uptrend'. However, analysts caution that if the distribution day count increases or the Nifty breaches key support levels, the outlook could shift to 'Uptrend Under Pressure'. Immediate support is seen at the 25,700 level, while a decisive close above 26,000 is needed to revive bullish confidence.
The Nifty Bank index also closed 0.51% lower at 59,687, facing selling pressure near the 60,000 mark. It continues to trade above key short-term moving averages, suggesting the broader trend is still intact. Its RSI is near 56, indicating neutral-to-positive momentum.
MarketSmith India is a stock research platform offering tools and resources based on the CAN SLIM investment system. The views are those of the analyst and not of Mint. Investors are advised to consult certified experts before making any investment decisions.
