As the Indian stock market commenced trading for the 2026 calendar year on a subdued note, research platform MarketSmith India has identified two stocks for investors' consideration on Thursday, 2 January. The recommendations come alongside a mixed session where benchmark indices struggled for direction amid thin global liquidity.
Market Opens 2026 on a Cautious Note
Indian equity benchmarks began the new year without significant momentum. The Nifty 50 index settled marginally higher at 26,146.55, while the BSE Sensex edged 32 points lower to close at 85,188.60. Trading activity was impacted by the ongoing global New Year holidays, leading to thin liquidity. Sectoral performance showed sharp divergence, setting a selective tone for the market.
Gains were led by the Nifty Auto index, which rose more than 1%, buoyed by robust December sales numbers from major automakers. The Information Technology (IT) and Realty sectors also witnessed steady buying interest. However, these advances were largely offset by a steep sell-off in the Fast-Moving Consumer Goods (FMCG) sector, which slumped over 3%. This decline was primarily triggered by a nearly 10% plunge in ITC shares after a government notification increased excise duty on tobacco products.
Beneath the surface, the broader market displayed relative resilience. The advance-decline ratio remained positive, indicating underlying strength in mid-cap and small-cap segments even as large caps consolidated.
MarketSmith India's Stock Picks: Detailed Analysis
The advisory service, which follows the CAN SLIM methodology pioneered by William J. O'Neil, has recommended one stock each from the financial services and infrastructure sectors.
Fedbank Financial Services Ltd (Buy)
MarketSmith India recommends buying Fedbank Financial Services in the price range of ₹152 to ₹155. The stock's last traded price was ₹154.5.
Investment Rationale: The recommendation is based on the company's strong parentage and brand support from Federal Bank. Analysts highlight its growing presence in the gold loan and MSME (Micro, Small & Medium Enterprises) lending segments, alongside improving loan book growth and a better asset mix. The expansion of its branch network and customer base, coupled with a strategic focus on secured lending which reduces credit risk, are viewed positively.
Key Metrics & Technical View: The stock trades at a Price-to-Earnings (P/E) ratio of 24.54. Its 52-week high stands at ₹166.80, with a trading volume of ₹30.13 crore noted. From a technical perspective, the stock has shown a horizontal trendline breakout.
Target and Risk: MarketSmith India has set a target price of ₹176 for a holding period of two to three months, with a stop-loss advised at ₹144. Investors should note risk factors including high dependence on the gold loan portfolio, sensitivity to interest rate cycles, potential asset quality pressure during economic slowdowns, rising competition, and regulatory changes impacting Non-Banking Financial Company (NBFC) operations.
Adani Energy Solutions Ltd (Buy)
The second recommendation is to buy Adani Energy Solutions between ₹1,040 and ₹1,056. The stock was last seen trading at ₹1,047.
Investment Rationale: The pick is driven by the company's strong presence in the power transmission and distribution sector. It benefits from long-term contracted and regulated revenue, providing high visibility. The firm is seen as a direct beneficiary of India's ongoing grid expansion and renewable energy integration plans. The backing of the Adani Group with its execution capabilities and the stable cash flows generated from regulated assets add to the appeal.
Key Metrics & Technical View: The stock's P/E ratio is 47.03, and its 52-week high is ₹1,061.70. The trading volume recorded was ₹291.44 crore. Technically, the stock is seen to be bouncing back from its 21-Day Moving Average (21-DMA).
Target and Risk: The advisory has set a target price of ₹1,180 over two to three months, with a stop-loss at ₹984. Key risks involve a high leverage and capital-intensive business model, regulatory and tariff-related uncertainties, group-level governance and reputational risks, potential execution delays in large infrastructure projects, and sensitivity to broader policy and political developments.
Market Outlook and Technical Perspective
According to MarketSmith India's analysis, the market status, as per O'Neil's methodology, is currently a "Confirmed Uptrend". This designation came after the Nifty 50 decisively surpassed its previous rally high. For the uptrend to remain confirmed, the market action needs to stay constructive. A rise in distribution days or a breach of key support levels could shift the outlook to "Uptrend Under Pressure".
Technically, the Nifty 50 continues to trade within a 25,700-26,300 range. A decisive close above 26,300 is seen as a positive trigger that could propel the index towards 26,500–26,700 levels. On the downside, 25,700 is the first support level, with 25,300 being a critical demand zone. Momentum indicators like the Relative Strength Index (RSI) are in neutral-to-positive territory, suggesting consolidation within the prevailing trend rather than exhaustion.
The Nifty Bank index also closed positively at 59,711.55, gaining 0.22%, and continues to trade above all its key moving averages, indicating underlying strength in banking stocks.
Disclaimer: The views and recommendations are those of MarketSmith India (William O’Neil India Pvt. Ltd., SEBI Registration No.: INH000015543). These do not represent the views of Mint. Investors are advised to consult certified experts before making investment decisions.
