MarketsmithIndia Articles

Broader Market Outperforms; Asian Paints Q2 Beats Estimates on All Fronts

Posted Date: October 22 2020

Today’s Action

Nifty, -0.4%; Sensex, -0.4%; Nifty Midcap, +0.6%; Nifty Smallcap, +1.1%; Model Portfolio, -0.5%

Market Pulse Rally Attempt

Nifty opened with a cut this morning. It remained in a negative territory during the day and traded range bound. It found resistance near yesterday’s close of 11,938. The good part is yesterday’s low was not breached and volume was comparatively lower. Nifty is trading 3.6% and 11.1% above is 50- and 200-DMA, respectively. On the sectoral front, there was a notable gain only in Nifty Metal (+0.8%). Nifty FMCG and Realty managed to close 10–20bps higher. On the flip side, Nifty Pharma, Bank, and IT closed 50–80bps lower. The broader market outperformed the benchmark indices. Of 2,216 stocks traded, 1,016 advanced, 812 declined, and the rest remained unchanged. INR continues to depreciate and closed at Rs 73.53 per USD.

Looking forward, we prefer to see a follow-through day before shifting the market to a Confirmed Uptrend. A follow-through day is a solid up session, generally a 1.5% or higher gain, with volume being higher than the previous day. However, we are positive on the general market as we can find further evidence of good behavior in leaders that have already broken out; for example, HDFC Bank, Reliance, Infosys, and Asian Paints. During this time, one should look for stocks with quality fundamentals, RS line trending higher, and breaking out from consolidation areas.


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