Index Extends its Loss; Market Status Shifted to a Downtrend

Nifty, -0.9%; Sensex, -0.8%; Nifty Midcap, -1.5%; Nifty Smallcap, -1.8%; Model Portfolio, -1.1%

Market Pulse Downtrend

Nifty, after a gap up-opening, remained volatile throughout the day and extended its loss for the fourth consecutive session. Further, volume was higher than the previous session. Today’s action qualified as a distribution day as the index fell more than 0.2% on a volume higher than the previous session. Also, we moved the market to a Downtrend as Nifty breached its 50-DMA, distribution day count elevated to seven, and many leading stocks failed to hold logical support levels. The broader market also continued to remain bearish. Nifty Midcap was down 1.5%, while Smallcap closed 1.8% lower.

On the sectoral front, barring Nifty Pharma (+0.7%) and Nifty IT (+0.7%), all the sectoral indices continued to close in the red. Nifty Media lost more than 2.5%. Similarly, Nifty PSU bank, Pvt bank, Realty, and Auto were down 1–2%. Advance-decline ratio was skewed toward decliners. Out of 2,198 stocks traded, 413 advanced, 1,474 declined, and the rest remained unchanged.

Under this market conjuncture, investors should remain on the sidelines from taking any fresh exposure. Further, investors already with positions open should trim their market exposure, and raise cash if possible. They should wait for the market to show credible signs of recovery and meanwhile, can observe the stocks which are showing resilience under falling market scenarios. Looking forward, we will shift the market to a Rally Attempt if Nifty establishes a bottom and stays above today’s low (11,085) for three straight sessions. From there, we would prefer to see a follow-through day before shifting the market back to a Confirmed Uptrend. Should this occur, the focus will be on ideas that show the best relative strength with good accumulation.