Market Stages Smart Recovery; Metal Stocks Outperform

Nifty, +0.5%; Sensex, +0.3%; Nifty Midcap, +1.8%; Nifty Smallcap, +1.9%; Model Portfolio, +2.2%.

Market Pulse: Uptrend Under Pressure

Distribution Day Count: Six

Today, Nifty gapped down more than 100 points and breached yesterday’s low. However, there was a smart recovery of more than 300 points from the low and the index closed in the top quartile of the day’s range. Action in the broader market was also constructive. However, the midcap and smallcap indices found resistance near their 50-DMA. On the sectoral front, Nifty Metal (+3.1%) was the top gainer. Nifty Realty, Pharma, and PSU Bank closed 2–2.5% higher. The advance-decline ratio was skewed toward the advancers. Out of 2,055 traded stocks, 1,522 stocks advanced, 465 declined, and the rest remained unchanged.

Top Gainers and Losers (Source: NSE)

Yesterday, market status was changed to an Uptrend Under Pressure. We will change the status to a Downtrend if more distribution days are added or if Nifty fails to reclaim its 50-DMA and market leaders show signs of deterioration in their price actions. On the flip side, the status will be changed back to a Confirmed Uptrend if Nifty retakes the 18,604 level (the high during the recent rally). Though today’s bounce back was good, investors should not be deceived by such moves and must let the market reclaim its 50-DMA. Proceed with caution. Stocks slipping below their 50- and 200-DMA on above average volume should be sold. Consider exiting stocks that have declined 8% from the buy price.