I am used to smudging pencil with my finger to get a tonal gradation. Is it OK to do this?

Many artists do this, so, yes, it is OK. But I don’t personally like this technique as it seldom shows a gradual movement from light to dark. It is usually only showing two or perhaps three levels of darkness. I also think it looks unprofessional; it looks like it is a smudge (which of course it is). But if you wish to try this technique as one of the exercises in developing a sphere – as shown in Module 1 (one), then by all means, have a go.