Nifty Adds a Distribution Day; HCL Technologies Reports Good Numbers

Nifty, +0.6%; Sensex, +0.5%; Nifty Midcap, -1.2%; Nifty Smallcap, -0.6%; Model Portfolio, -2.2%.

Market Pulse: Confirmed Uptrend

Distribution Day Count: Three

Weekly Market Review

Nifty continued its positive momentum in the first four trading sessions of the week. It hit a new ATH on the first three trading sessions. Today, Nifty opened on a flat note and quickly turned negative. It was a highly volatile session as it fell over 200 points intraday, paring most of the weekly gains. Nifty added a distribution day as it fell more than 0.2% on volume higher than that of yesterday’s session. However, the distribution day count remains at three as one day expired today. Broader market indices, Midcap (-1.2%) and Smallcap (-0.6%) closed lower today.

During the week, the sectoral indices reaction was mixed. Nifty PSU Bank (+5.9%) closed higher followed by Auto (+4.5%). Nifty Metal (-2.3%) was the major decliner, followed by Pharma (-1.9%) and Media (-1.4%). Today, the advance-decline ratio was inclined toward the decliners. Of the 2,225 stocks traded, 547 advanced, 1,345 declined, and the remaining were unchanged.

With leadership broadening and indices above relevant intermediate term moving averages, we will continue to look for leadership-quality growth names to form entry points. If a pullback/consolidation happens, 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 showing technical weakness. Also, tracking distribution days is crucial as rise in distribution days can halt the uptrend.