Stocks to buy: MarketSmith India recommends these two stocks for 5 February

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Subscribe to enjoy similar stories. Nifty50, India's benchmark index, closed 378 points higher at 23,739.25 on Tuesday after the US decided to pause the tariffs planned for Mexico and Canada, providing short-term relief from growing trade tensions. Taking cues from global markets, the index started the session with a gap-up opening at 23,509.90 and continued its bullish momentum throughout the day to close near the day’s high.

As a result, the Nifty formed a bullish candle with a higher-high and higher-low price structure on the daily chart. Barring FMCG, all other major sectoral indices closed higher. The advance-decline inclined toward advancers as the ratio stood around 3:1.

From a technical perspective, the index managed to close above its 50- and 100-EMA. However, on 4 February, it faced some resistance around its 50-DMA. The 14-day relative strength index (RSI) is trending upward and is currently positioned around 57.

Another technical indicator, the moving average convergence/divergence (MACD), has turned above positive crossover but is still trending below its central line. According to O’Neil’s methodology of market direction, the Nifty staged a follow-through day as it advanced more than 1.5% on higher volume compared to Monday’s session. Hence, we are upgrading the market status to a Confirmed Uptrend.

We may downgrade the status to an Uptrend Under Pressure if the distribution day count increases and Nifty breaches its key support level. The index managed to close above its 50- and 100-EMA. However, it faced some resistance around its 50-DMA.