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Another Volatile Session on Expiry; Financial Stocks Decline the Most

Posted Date: November 19 2020

Today’s Action

Nifty, -1.3%; Sensex, -1.3%; Nifty Midcap, -0.6%; Nifty Smallcap, -0.2%; Model Portfolio, -0.9%

Market Pulse Confirmed Uptrend

Distribution Day Count: One

After opening around 100 points lower, Nifty quickly saw buying and made an all-time high of 12,963. Today being a weekly expiry, there was volatility throughout the session. Post noon, sharp selling was seen across the sectors, and Nifty lost more than 200 points from intraday high and closed near day’s low. Today’s session qualifies as a distribution day, as the fall was more than 0.2% on volume higher than yesterday. 72% of Nifty50 stocks declined today, led by State Bank Of India (-4.9%) and Icici Bank (-3.8%).

On the sectoral front, barring Nifty FMCG (+0.4%) and Media (+0.3%) all the sectoral indices ended in the red. Nifty PSU Bank (-3.1%) declined the most, followed by other financial related indices. Market breadth was in favor of decliners. Of 2,215 stocks traded, 828 advanced, 1,011 declined, and the rest remained unchanged.

Occurrence of distribution days is a sign of weakness in the market. Also, our approach toward the market turned cautious as Nifty is currently trading around 19% above its 200-DMA, which is rare. We might expect some pullback in the market. Thus, we turned cautious while adding and closely reviewing the existing positions. It is also advised to book partial profits in stocks that are extended from their moving averages. We will look for leadership among some good stocks to push the market up. On the flip side, tracking distribution days is crucial. Accumulation of distribution days can halt the uptrend.

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