Indian stock markets extended their losses for a second consecutive session on Tuesday, 6 January, as investors turned cautious. The benchmark Nifty 50 index closed at 26,178.70, marking a decline of 0.27%. The BSE Sensex fell by 376.28 points to settle at 85,063.34. Market sentiment remained broadly negative, with more stocks declining than advancing.
MarketSmith India's Top Stock Picks for Today
Amid this backdrop of consolidation, research platform MarketSmith India has identified two stocks for investors to consider on 7 January. The recommendations are based on a blend of fundamental strength and technical analysis.
Buy: Union Bank of India (Current Price: ₹165)
MarketSmith India recommends a buy on Union Bank of India in the price range of ₹165 to ₹168. The firm has set a target price of ₹188 for a holding period of two to three months, with a stop loss advised at ₹156.
The recommendation is backed by the bank's improving fundamentals. Key reasons include a strong recovery in asset quality, visible in declining Gross and Net Non-Performing Assets (GNPA & NNPA). Credit growth is being supported by demand from retail, MSME, and corporate segments. Profitability is improving due to better Net Interest Margins (NIM), and a reduced provisioning burden is enhancing earnings visibility. The bank also benefits from an adequate capital position with government backing and is seen as a beneficiary of consolidation within the public sector banking space.
Key Metrics: The stock trades at a P/E of 6.72 and saw a volume of ₹455.29 crore. Its 52-week high is ₹167.30. Technically, the stock is showing a cup-with-handle breakout pattern.
Investors should note the associated risks, which include the bank's exposure to stressed corporate and PSU-linked sectors. There is a risk of margin pressure if interest rates fall sharply. Slower decision-making compared to private banks, potential asset quality weakening during an economic slowdown, and intense competition from private banks and fintech firms are other factors to consider.
Buy: Apollo Tyres Ltd (Current Price: ₹519)
The second recommendation is a buy on Apollo Tyres Ltd, advised between ₹514 and ₹524. The target price is set at ₹590 for two to three months, with a stop loss at ₹490.
The rationale for this pick hinges on the company's strong domestic and international brand presence, which provides diversified revenue streams. A recovery in margin profile, aided by softer raw material prices, is a positive. The company's focus on premium and value-added tyre segments is improving profitability. Consistent capacity expansion, product innovation, and an improving balance sheet with steady operating cash flows further support the outlook.
Key Metrics: Apollo Tyres has a P/E of 40.90, with a 52-week high of ₹540.50. The trading volume was ₹101.01 crore. On the technical front, the stock has reclaimed its 50-Day Moving Average (50-DMA).
Key risks for Apollo Tyres include sensitivity to volatility in the prices of key inputs like rubber and crude oil. Demand is cyclical and tied to the auto and replacement markets. The company also faces intense competition from both domestic and global tyre manufacturers, and currency fluctuations can impact its overseas profitability.
Market Recap and Technical Outlook
The trading session on 6 January was marked by consolidation. The Nifty 50 traded in a narrow range between 26,124 and 26,274, facing resistance near the 26,250-26,300 zone. Sectoral performance was mixed. Defensive sectors like Healthcare (+1.85%) and Pharma (+1.69%) saw buying interest, providing some cushion to the indices. However, sectors like Oil & Gas (-1.75%) and Media (-1.05%) were under pressure. Heavyweights such as Reliance Industries (-4.3%) and Trent (-8.6%) were significant drags.
According to MarketSmith India's analysis, the broader market trend remains positive. The Nifty 50 is still trading within a rising channel and above its key moving averages. The market status is classified as a "Confirmed Uptrend" as per William O'Neil's methodology. A sustained move above 26,300 could trigger the next rally phase toward 26,500-26,700. On the downside, 25,900 and 25,500 are crucial support levels to watch.
The banking index, Nifty Bank, showed resilience, closing positively at 60,118.40 after finding buying interest at lower levels. It continues to trade above all key moving averages, supporting a constructive medium-term outlook. The index may aim for 60,500-61,000 in the coming sessions, with 58,500-58,000 acting as a major support zone.
MarketSmith India is a stock research platform that utilizes the CAN SLIM investment methodology founded by William J. O'Neil. The views and recommendations are those of the individual analysts. Investors are advised to consult certified experts before making investment decisions.
