Nifty Escapes Distribution Day; Broader Markets Outperform

Nifty, -1%; Sensex, -1.3%; Nifty Midcap, +0.4%; Nifty Smallcap, +0.4%; Model Portfolio, -0.3%

Market Pulse Uptend Under Pressure

Distribution Day Count: Six

Nifty had a muted opening this morning, taking global cues. It made a day’s high near the open and succumbed to selling pressure to close near the day’s low. In the process, the index closed below its 21- and 50-DMA. Despite falling more than 0.2%, the index escaped a distribution day as volume was lower compared with the previous session. In the broader market, Nifty Midcap and Smallcap outperformed and each closed with a gain of 0.4%.

On the sectoral front, performance was mixed. Nifty Realty (+1.7%) led the rally followed by Nifty PSU Bank and Nifty FMCG, which closed with gains of 1.3% and 1.0%, respectively. On the flip side, Nifty Financial service, Nifty Bank, and Nifty Pvt Bank were the major decliners, which closed lower in the range of 1.5–2.0%. The advance-decline ratio was in favor of decliners. Of 2,291 stocks traded, 900 advanced, 990 declined, and the rest remained unchanged.

Market Status Overview

The index is currently hovering around its key moving averages. From here, we would like the index to firmly trade above its key moving averages. On the flip side, we will change the status to a Downtrend, if one more distribution day is added or if Nifty makes a decisive breach of its key moving averages 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 distribution day on the higher side, investors should consider booking profits in the 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.