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Market Status Changes to Rally Attempt; Nifty Faces Resistance at 50-DMA

Posted Date: September 29 2020
Today’s Action

Nifty, -0.1%; Sensex, -0.02%; Nifty Midcap, -0.2%; Nifty Smallcap, -0.3%; Model Portfolio, +0.9%

Market Pulse Rally Attempt

Nifty, after a gap-up opening, witnessed resistance near its 50-DMA. The index traded toward the day's low of 11,181 and closed the volatile trading session near the lower half of the trading range. Volume was higher than that of the previous session. Further, we changed the market status to a Rally Attempt as Friday was a blue rally day (Day 1) and Nifty managed to stay above its Day 1 low for two consecutive sessions. In the broader market, both Midcap and Smallcap closed 0.2% and 0.3% lower, respectively.

On the sectoral front, mixed reactions were observed. Nifty Metal (+2%) was up the most, followed by Nifty IT and Auto, which were the only two indices that advanced 0.3% each. On the flip side, Nifty FMCG (-1.5%) and PSU Bank (-2.2%) were the major two decliners. The advance-decline ratio was in favor of decliners. Of 2,206 stocks traded, 817 advanced, 1,004 declined, and the rest remained unchanged.

Looking forward, we would 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). Should this occur, the focus will be on ideas that show the best relative strength with good accumulation. Stocks that recover the quickest tend to lead the next run. On the flip side, if the Nifty breaches its recent low of 10,790, the market will be moved back to a Downtrend.

What do you think? Please email us any questions or comments.

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