MarketSmith India’s top picks for 4 June

Two stock recommendations for today, 3 June, by MarketSmith India:

Gujarat State Fertilizers & Chemicals Ltd (current price: 208.42)

Why it’s recommended: Strong R&D capability, robust financial position.

Key metrics: P/E: 13.74 | 52-week high: ₹ 274.70 | Volume: ₹155.17 crore

Technical analysis: Reclaimed its 200-DMA

Risk factors: Volatile raw material prices, monsoon dependency, and environmental compliance

Buy at: ₹208.42

Target price: ₹240 in three months

Stop loss: ₹195

Gujarat Narmada Valley Fertilizers & Chemicals Ltd (current price: ₹551)

Why it’s recommended: Diversified revenue streams, strategic expansion plans.

Key metrics: P/E: 13.45 | 52-week high: ₹677 | Volume: ₹103.13 crore

Technical analysis: Bullish flag pattern breakout

Risk factors: Commodity price volatility

Buy at: ₹551

Target price: ₹610 in three months

Stop loss: ₹525

Nifty 50: How the benchmark index performed on 3 June

On Tuesday, Nifty 50 opened the session on a positive note. However, it failed to remain in the positive zone during the first few minutes of the trade. Persistent selling pressure through the day dragged the index lower, resulting in a close near the session’s low. This intraday reversal led to the formation of a bearish candlestick on the daily chart, indicating waning bullish momentum and the potential for a short-term trend reversal. Market breadth remained weak, with the advance-decline ratio settling negatively at 2:3.

Technically, the index breached its 21-DMA on a closing basis, indicating a deterioration in short-term price and momentum trends. The recent price action suggests that sellers are gradually gaining control, as reflected in the increased volatility over the past few weeks. The relative strength index (RSI) is trending downward and is currently hovering around 50, while a negative crossover in the MACD further reinforces the weakening momentum.

The index has breached its 21-DMA along with nine distribution days, signaling weakening short-term momentum. Hence, as per O’Neil’s methodology of market direction, the overall market status has been downgraded to an “Uptrend Under Pressure” from a “confirmed uptrend”.

Nifty50 is now trading below its 21-DMA on the daily chart with a negative bias. The index is currently trending sideways with a negative bias, and immediate support is placed around 24,500–24,400. A further breach below this range may turn more negative toward 24,000 in the coming trading sessions. On the upside, strong resistance is placed in the range of 25,000–25,200. A decisive breakout above this range is crucial to revive bullish sentiment. Until then, a cautious and defensive approach can be followed in the coming days.

How did the Nifty Bank perform yesterday?

On Tuesday, the Nifty Bank opened the session on a positive note but quickly lost momentum as volatility gripped the index. Despite a strong start at 56,104.80, it failed to sustain gains and drifted lower during the day. The index oscillated in a wide range between 56,161.40 and 55,455.80, finally settling at 55,599.95, reflecting a loss of intraday strength. The formation of a bearish candlestick on the daily chart indicates profit booking at higher levels and a lack of follow-through buying interest.

From a momentum standpoint, the relative strength index (RSI) is trending sideways and currently hovers near the neutral 58 mark, suggesting a momentum loss. Additionally, the MACD has triggered a negative crossover, further reinforcing the emerging bearish tone. These indicators collectively suggest a cautious near-term outlook, with limited upside potential unless fresh buying emerges above key resistance zones.

According to O’Neil’s methodology of market direction, the Nifty Bank has recently transitioned from an “Uptrend Under Pressure” to a more constructive phase of a “Confirmed Uptrend,” highlighting renewed strength and resilience in the broader trend.

The Nifty Bank is currently consolidating near its all-time high but has struggled to break and sustain above 56,000. A decisive breakout and a sustained close above this threshold are essential to reaffirm bullish momentum and potentially pave the way for a rally toward 57,500–58,000. In the absence of such a breakout, the index is likely to remain within its current consolidation range. On the downside, immediate support is placed near 55,000, followed by 54,500.

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, developed by legendary investor William J. O’Neil. You can access a 10-day free trial by registering on its website.

Trade name: William O’Neil India Pvt. Ltd.

Sebi 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.