Nifty Adds a Distribution Day; Metal Stocks Decline, Nifty IT Outperforms

Nifty, -0.3%; Sensex, -0.1%; Nifty Midcap, -1.4%; Nifty Smallcap, -1%; Model Portfolio, -1.9%

Market Pulse Uptrend Under Pressure

Distribution Day Count: Five

Nifty opened with moderate gains, and continued positive momentum in the first hour, making a high of 11,431. After moving sideways for a while, Nifty dropped 150 points from the day's high, closing 30bps lower. As the volume was higher compared with the previous session, we will consider today’s action as a distribution day. Higher selling was witnessed after European markets opened 1% lower. Broader indices were hit hard. Nifty Midcap and Smallcap closed 1.4% and 1.0% lower, respectively. On the sectoral front, only Nifty IT closed higher. Nifty Metal and Media closed 3.2% lower, while Nifty Realty and Pharma were down 2.0% and 1.6%, respectively. Advance-Decline ratio was skewed toward decliners. Out of 2,190 stocks traded, 560 advanced, 1,251 declined, and the rest remained unchanged.

As the market is in an Uptrend Under Pressure, investors should proceed ahead with caution. Unless a stock shows exceptional fundamental and technical strength, no new addition to the portfolio is advised. Investors should consider booking profits in stocks that have performed well and have advanced 20–25% from their ideal buy points. Looking forward, we will change the status to a Downtrend, if more distribution days are added or if Nifty breaches the 50-DMA (11,137) and the 200-DMA (10,803). On the flip side, the status will be back to a Confirmed Uptrend if Nifty retakes 11,795 level (high during the recent rally).