As the new year begins, investors are looking for fresh opportunities, and research platform MarketSmith India has identified two stocks it believes hold significant potential. The recommendations come on the back of a firm closing for Indian equity benchmarks on the final trading day of 2025, which snapped a four-day losing streak.
Markets Snap Losing Streak on Year-End Buying
The Indian stock market concluded 2025 on a positive note, driven by broad-based value buying. The Nifty 50 index advanced by 190.75 points, or 0.74%, to settle at 26,129.60. Similarly, the S&P BSE Sensex rose by 545.52 points, or 0.64%, closing at 85,220.60.
Market sentiment received a significant boost from the metal sector. This surge followed the government's announcement of a three-year import tariff on select steel products, aimed at curbing cheap shipments from China. Stocks like JSW Steel (up 4.8%) and Tata Steel (up 2.4%) were among the top gainers, propelling the Nifty Metal index higher by 1.43%.
The overall market breadth was encouraging, with more stocks advancing than declining. Mid-cap and small-cap indices even managed to outperform the frontline benchmarks. While foreign institutional investor (FII) outflows and thin year-end trading volumes posed challenges in December, the session highlighted the resilience of domestic liquidity. The market's focus now shifts to upcoming third-quarter corporate earnings and January auto sales data, which will be crucial in determining if the current rebound can be sustained.
MarketSmith India's Top Picks for 1 January
MarketSmith India, a platform based on William J. O'Neil's CAN SLIM investment methodology, has recommended two stocks for investors to consider on the first trading day of 2026.
1. Hindalco Industries Ltd
The first recommendation is Hindalco Industries Ltd, with a current market price of around ₹886. The firm cites the company's strong integrated position in the aluminium and copper value chain as a key strength. Its subsidiary, Novelis, is a global leader in aluminium flat-rolled products. Hindalco is seen as a major beneficiary of growing demand from infrastructure projects, electric vehicles (EVs), and the renewable energy sector.
Key investment rationale includes:
- Improving operating efficiencies and cost control measures.
- A healthy balance sheet with strong cash flow generation.
- Long-term capital expenditure plans supporting capacity expansion.
The stock is trading at a P/E ratio of 11.47 and has a 52-week high of ₹890. From a technical perspective, analysts note a cup base pattern breakout. MarketSmith India suggests a buy zone between ₹880 and ₹892, with a target price of ₹980 over the next two to three months. A stop loss is advised at ₹840.
Key risks involve: sensitivity to global commodity price cycles, exposure to fluctuations in aluminium and copper prices, high dependence on international demand (especially from the U.S. and Europe), and pressure on margins from rising energy and raw material costs.
2. Fertilizers and Chemicals Travancore Ltd (FACT)
The second pick is the public sector undertaking Fertilizers and Chemicals Travancore Ltd (FACT), trading near ₹912. The recommendation is based on its strategic presence in the fertiliser and chemical sectors, with demand underpinned by agriculture and government subsidy frameworks.
Investment drivers include:
- Ongoing turnaround efforts through operational restructuring.
- Significant asset base and land value that provide optional upside.
- Potential benefits from government policy and revival initiatives.
It is important to note that the stock has a high P/E ratio of 758.81, reflecting its current earnings profile, and its 52-week high is ₹1,112. Technically, the stock is seen to be in a bullish momentum trend. The advisory recommends buying in the range of ₹908 to ₹920, targeting ₹1,030 in two to three months, with a stop loss at ₹868.
Primary risks for FACT are: heavy dependence on government subsidies and policies, a history of weak profitability and volatile earnings, margin impacts from rising input costs, and execution risks related to its turnaround plan.
Technical Outlook and Market Status
According to MarketSmith India's analysis, the Nifty 50 index has shifted to a "Confirmed Uptrend" as per O'Neil's methodology, having decisively crossed a previous rally high. The index is currently consolidating within a broad range of 25,700 to 26,300. A decisive close above 26,300 could open the path towards 26,500–26,700 levels. On the downside, 25,700 and 25,300 are key support levels to watch.
The Nifty Bank index also performed well, gaining 0.69% to close at 59,581.85. It successfully reclaimed its 21-day moving average, indicating improving near-term strength. Resistance is seen in the 59,800–60,100 zone, while support lies between 58,500 and 58,000.
Disclaimer: The views and recommendations are those of the individual analyst and research platform. Investors are advised to consult certified experts before making any investment decisions.
