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Nifty Adds a Distribution Day; Financials Drag the Most

Posted Date: April 05 2021
Today’s Action
Nifty, -1.5%; Sensex, -1.7%; Nifty Midcap, -1.3%; Nifty Smallcap, -1.4%; Model Portfolio, -0.7%
Market Pulse Uptend Under Pressure
Distribution Day Count: Seven
Nifty had a muted opening today, and quickly succumbed to selling pressure. It made a day’s low of 14,459 i.e., down over 400 points from the previous session’s close. In the process, the index closed below its 21- and 50-DMA. However, post noon, the index saw some buying at lower levels to close in the upper half. The session qualified as a distribution day as it fell more than 0.2%, on higher volume compared with the previous session. 
Barring Nifty IT (+1.9%) and Metal (+0.9%), all the sectoral indices closed in the red. Financial related stocks dragged the market as they closed with losses around 3.4-4.1%. The advance-decline ratio was in favor of decliners. Of 2,298 stocks traded, 647 advanced, 1,308 declined, and the rest remained unchanged.
Market Status Overview
- Nifty breached its 21- and 50-DMA today, after hovering around its key moving averages in the past few weeks. Index breaching its moving averages is a sign of weakness. We will change the status to a Downtrend, if Nifty doesn’t retake its 50-DMA and if market leaders show signs of deterioration in their price actions.
- Under current market conjecture, since we are in an Uptrend Under Pressure with higher number of distribution days, investors should consider booking profits in stocks that have performed well and have advanced 20–25% from their ideal buy points. Even if the market undergoes a small correction, these stocks are more likely to consolidate and test their moving averages. Further, stocks slipping below their 50- and 200-DMA on above average volume should be sold. Consider exiting stocks that have declined 8% from your buy price.

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