Nifty Adds a Distribution Day; Auto Stocks Lead, BFSI and Metal Lag

Nifty, -0.4%; Sensex, -0.3%; Nifty Midcap, -1.3%; Nifty Smallcap, -0.7%; Model Portfolio, -2%.

Market Pulse: Confirmed Uptrend

Distribution Day Count: Five

Weekly Market Review

Nifty remained volatile during the week. It started the week on a negative note but rebounded sharply on Tuesday and Wednesday and hit a fresh all-time high. However, it staged a downside reversal in the last two trading sessions of the week and added two distribution days, taking the count to five. During the week, among sectoral indices, only Nifty Auto (+3.3%) and IT (+0.5%) closed in the green. On the flip side, Nifty Metal (-6.3%) was the top loser. Nifty Bank, Pharma, and Realty closed 3.0–3.5% lower. Today, market breadth was skewed toward decliners. Of 2,211 stocks traded, 514 advanced, 1,391 declined, and the remaining were unchanged.

With indices above relevant intermediate-term moving averages, we will continue to look for leadership-quality growth names to form entry points. At the same time, the distribution day count is at five and many stocks have breached their 21- and/or 50-DMA. In this type of market, the message is to stay the course. We will continue to monitor the market and look for signs of strength or weakness. During pullback/consolidation, it will be crucial for Nifty to hold its 21-DMA. It is advised to closely review the existing positions and book profits in stocks that are extended from their moving averages and/or showing technical weakness. Also, tracking distribution days is crucial as a rise in distribution days can halt the uptrend.