Nifty Adds Distribution Day But Holds Above 21-DMA; Nifty IT Gains 2.6% During the Week

Weekly Action

Nifty, +0.6%; Sensex, +0.8%; Nifty Midcap, +0.2%; Nifty Smallcap, +1.4%; Model Portfolio, -0.4%.

Market Pulse Confirmed Uptrend

Distribution Day Count: Four

Weekly Market Review

Nifty started the week on a positive note and reclaimed its 21-DMA on Tuesday and continued positive momentum on Wednesday. Today, selling pressure was concentrated among largecap stocks, dragging Nifty more than 1% lower. As the volume was higher compared with the previous session, the index registered a distribution day. Advance-decline ratio was in favor of decliners. Out of 2,239 stocks, 758 advanced, 1,135 declined, and the rest remained unchanged.

On the sectoral front, there was mixed and muted action. Nifty IT (+2.6%) was the top gainer, while Nifty Realty (-2.3%) was the top decliner. Nifty Bank and Financial Services closed 0.7–1.0% higher. While Nifty Energy, FMCG, Metal, and Pharma closed 0.1-1.0% lower.

Market Status Overview

-Last week, three distribution days expired due to aging and one was added. This week, one distribution day was added. The total count stands at four.

-Since the last few days, Nifty is oscillating around its 21-DMA. Today, Nifty breached its 21-DMA intraday but closed above it. However, without trying to predict and decode stories, we will take what the market gives and continue to monitor unfolding conditions.

-Looking ahead, we may downgrade the status to an Uptrend Under Pressure if Nifty falls below its 21-DMA on higher volume and the distribution day count increases. Further, we may downgrade the status to a Downtrend if Nifty breaches its 50-DMA, distribution day count increases above five, and leading stock breaks below key support level. On the flip side, the confidence on uptrend will enhance if Nifty makes a move toward a new high or stages an additional follow-through day.