Nifty Finds Support at 50-DMA; PSU Bank Stocks Decline the Most

Nifty, -2.6%; Sensex, -2.8%; Nifty Midcap, -1.4%; Nifty Smallcap, -2.9%; Model Portfolio, -2.7%.

Market Pulse Rally Attempt

Weekly Market Review

Nifty traded near its 21-DMA during the week. It breached its 21-DMA on Wednesday and traded below it throughout the week. On Friday, it found support at its 50-DMA and rebounded from it. Currently, it is trading 1.2% below its 21-DMA and above its long-term moving averages.

Barring Nifty Energy (+0.5%) all the sectoral indices closed lower during the week. Nifty PSU Bank (-4.5%) declined the most, followed by Nifty Auto (-4.2%) and Metal (-4.1%). Today, the advance-decline ratio was skewed toward advancers. Of 2,213 stocks traded, 950 advanced, 885 declined, and the rest remained unchanged.

Looking forward, we would prefer to see a follow-through day before shifting the market to a Confirmed Uptrend. A follow-through day is a solid up session, generally a 1.5% or higher gain, with the volume being higher than the previous day. Should this occur, the focus will be on ideas that show the best relative strength with good accumulation. Stocks that recover the quickest tend to lead the next run. On the flip side, if Nifty breaches its recent low of 10,790, the market will be moved back to a Downtrend.