In contrast, the BSE Midcap and Smallcap indices showed resilience, outperforming the main benchmarks with gains of 0.27% and 0.64%, respectively. This strength in the broader market helped the overall market capitalization of BSE-listed firms rise to nearly ₹450 lakh crore, up from ₹449 lakh crore the day before.

Leading the decline were heavyweight stocks like ICICI Bank, HDFC Bank, Mahindra and Mahindra, and Kotak Mahindra Bank. However, the losses were partially offset by support from stocks such as Reliance, NTPC, Power Grid, and Hindustan Unilever (HUL).

Two stock recommendations by MarketSmith India for 3 SeptemberBuy: Taj GVK Hotels & Resorts Ltd(current price: ₹ 430)Why it’s recommended: Strong brand and strategic promoters, robust earnings growth, expansion pipelineKey metrics: P/E: 21.65, 52-week high: ₹528.10, volume: ₹ 75.50 croreTechnical analysis: Reclaimed its 21-DMA and is trending above all its key moving averages with a positive biasRisk factors: Hospitality sector sensitivity, competition and market dynamics, and regulatory and external risksBuy: ₹430Target price: ₹490 in two to three monthsStop loss: ₹403Buy: Eveready Industries India Ltd (current price: ₹448)Why it’s recommended: Dominant market positions and strong brand legacy, market share gains in alkaline and rechargeable segmentsKey metrics: P/E: 35.31; 52-week high: ₹505; volume: ₹56.30croreTechnical analysis: Downward-sloping trendline breakoutRisk factors: Raw material price volatilityBuy at: ₹445–455Target price: ₹510 in two to three monthsStop loss: ₹ 420Nifty 50 Performance: Volatility and Technical Weakness

On Tuesday, 2 September, the Nifty 50 experienced a volatile trading session, ultimately closing on a subdued note due to profit-taking. After opening with strong gains and reaching an intraday high of 24,756, the index reversed course, shedding nearly 230 points to hit a low of 24,522.

The index finally settled at 24,579.60, a decline of 0.18% (45 points). The Sensex followed a similar trajectory, swinging over 750 points before closing lower by approximately 0.2% at 80,495.

Early gains were driven by Reliance and major banking stocks. Energy and FMCG sectors also provided some stability. Reliance Industries showed strength on optimism surrounding GST. Sugar stocks rallied following approvals for ethanol policy.

The rally faded post-midday as selling pressure emerged. The IT and Metals sectors weighed on market sentiment. The broader market also reflected a cautious mood, with the advance-decline ratio favouring decliners.

The Nifty 50’s sharp reversal from its morning gains highlights strong resistance near its 100-day Moving Average (DMA), currently around 24,700. This level is a critical hurdle; a sustained break above it is necessary to unlock further upside toward the 25,000 mark.

Momentum indicators suggest a cautious undertone. The Relative Strength Index (RSI) is trending sideways with a negative bias, hovering around 44. The Moving Average Convergence Divergence (MACD) has slipped into a bearish crossover below the central line.

According to O’Neil’s methodology, the market status has been downgraded to an “Uptrend Under Pressure.” This downgrade is a result of the Nifty breaching its 50-day DMA and the distribution day count reaching three.

Resistance: 100-DMA at 24,700.

Support: Immediate support is at 24,350–24,300. A break below this range could accelerate declines toward the 200-day DMA at 24,070.

The overall bias for the Nifty 50 remains weak. Any future pullbacks or rallies should be viewed as opportunities for short selling rather than initiating new long positions.

How Nifty Bank performed

On Tuesday, the Nifty Bank index experienced a volatile trading session, ultimately closing in negative territory. After a muted open and an attempt to gain momentum, selling pressure intensified after the first hour of trade, dragging the index lower. The index opened at 54,038.25, reached an intraday high of 54,160.95, but fell to a low of 53,578 before settling at 53,661.

This bearish price action led to the formation of a bearish engulfing candle on the daily chart, signalling potential weakness in the near term. The overall market sentiment remains fragile, with traders showing a preference for profit booking over new accumulations.

The technical indicators reinforce the bearish outlook. The Relative Strength Index (RSI) is in the oversold zone, hovering near 30, which points to persistent weakness. The MACD (Moving Average Convergence Divergence) also maintains a negative crossover below the central line, confirming the bearish momentum.

According to O’Neil’s methodology, the Nifty Bank remains in an “Uptrend Under Pressure” status.

Immediate support is established in the 53,600–53,500 range, which aligns with the session’s intraday low. A decisive break below this level could accelerate declines toward 53,000.

Resistance is seen in the 54,000–54,400 range. A sustained move above this band is necessary for a potential recovery. A breakout beyond 55,000 would be required to signal a stronger bullish momentum.

Given the bearish price action and volatile environment, investors are advised to adopt a cautious stance. This includes prioritizing fundamentally strong and technically resilient stocks, exercising strict risk management, and deploying capital selectively into high-conviction opportunities. Until a clear breakout occurs, the index is likely to remain highly volatile within its defined range.

MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. Trade name: William O’Neil India Pvt. Ltd. (Sebi-registered Research Analyst Registration No.: INH000015543)

Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.

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.