IT Stocks Outperform; HUL Q2 Margin, Revenue Beat Estimates

Nifty, +0.2%; Sensex, +0.3%; Nifty Midcap, +0.6%; Nifty Smallcap, +0.4%; Model Portfolio, +0.7%

Market Pulse Rally Attempt

Nifty after opening lower rebounded quickly and gained almost 100 points from low. It gained more strength as the day wore on and made a high of 11,950. However, due to some selling pressure, Nifty closed below 11,900. Nifty is trading 3.7% and 11% above is 50- and 200-DMA, respectively. Gains were led by IT stocks. Nifty IT closed 1.4% higher. On the flip side, Nifty PSU bank closed 1.2% lower. There was muted action in the rest of sectoral indices. Nifty Bank, Auto, Financial Services, and Pharma closed 0.2–0.3% higher, while Nifty FMCG (-0.4%) and Metal (-0.2%) closed lower. Of 2,215 stocks traded, 991 advanced, 829 declined, and the rest remained unchanged.

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, Dr Reddy, 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.