Stocks to buy: Two stock recommendations from MarketSmith India for 31 January

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Subscribe to enjoy similar stories. India's benchmark index Nifty50 extended its winning streak for the third consecutive session on Thursday and closed 86 points higher at 23,249.50. Taking cues from the global market, the index started the session with a muted opening at 23,169.50 and continued its bullish momentum, touching the intraday high of 23,322.

However, due to the monthly F&O expiry, the index witnessed some volatility and closed near the day’s high at 23,249.50. As a result, the index formed a bullish candle with a higher-high and higher-low price structure. Barring FMCG, all major sectoral indices closed higher.

The broader market participated in the rally as the advance-decline ratio is inclined toward advancers as the ratio stands at 6:1. From a technical perspective, the index once again moved to its earlier consolidation zone of 22,976–23,426 and the approaching 21-EMA. The 14-day, relative strength index (RSI), continues to trend upward and is currently positioned around 46.

However, RSI is still trending in the bearish zone on the daily chart. Another technical indicator, 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, we are changing the market status to a rally attempt.

Tuesday's session was considered day one of an attempted rally as Nifty closed in the green. Nifty has not breached the correction low of 22,787 since day one. Hence, today's action qualifies as day three of an attempted rally.