Nifty Escapes Distribution Day, Breaches 50-DMA; Paytm Lists at Discount

Nifty, -1.9%; Sensex, -1.7%; Nifty Midcap, -2.1%; Nifty Smallcap, -1.3%; Model Portfolio, -1.7%.

Market Pulse: Confirmed Uptrend

Distribution Day Count: Five

It was a tough week for investors as the markets were highly volatile. After a flat close on Monday, Nifty was down for the next three trading sessions. Tuesday, it breached its 21-DMA. Weakness intensified on Wednesday and the index breached the key level of 50-DMA. Nifty closed below its 50-DMA for the first time since May 15.

Today, being a weekly expiry, Nifty was highly volatile. Starting on a flat note, selling pressure gripped the markets as the index fell more than 250 points from day’s high in the first half of the session. In the second half, slight buying was seen, which was again sold into later near the day’s close. As the volume was lower than that of yesterday’s session we will not consider today as a distribution day.

Barring Nifty Auto (+0.4%), all sectoral indices closed lower for the week. Nifty Metal (-5.3%) declined the most followed by PSU Bank (-3.4%) and Realty (-3.3%).

The distribution day count currently stands at five. Nifty breached its 50-DMA, which is good enough reason to downgrade the market to an Uptrend Under Pressure. However, we are waiting for one more session as today is a weekly expiry day. If it fails to reclaim, we would downgrade the market status to Under Pressure. Reducing exposure to stocks breaking below their 21- or 50-DMA on higher volume is important.