Nifty Finds Support at its 100-DMA; Market Status Changed to Downtrend

Nifty, -3.5%; Sensex, -3.5%; Nifty Midcap, -5.5%; Nifty Smallcap, -5.5%; Model Portfolio, -3.7%

Market Pulse: Downtrend

Distribution Day Count: Seven

Nifty opened over 200 points lower amid imposition of night curfews in several states and possibility of imposition of lockdown in Maharashtra. Losses intensified as the session progressed. It lost another ~350 points from opening and closed 600 points lower compared with the previous session. Today’s session qualified as a distribution day as the fall was higher than 0.2% on volume higher than the previous session. Nifty found support at its 100-DMA, which has been a crucial historical support.

Barring Nifty Pharma (+0.5%), all the sectoral indices closed in the red. Nifty PSU Bank (-8.7%) declined the most followed by Realty (-7.3%). Financial-related sectors continued to drag the market down. Broader market underperformed the benchmark indices. The advance-decline ratio was in favor of decliners. Of 2,294 stocks traded, 241 advanced, 1,740 declined, and the rest remained unchanged.

Market Status Overview

- We moved the market to a Downtrend as Nifty breached its 50-DMA on higher volume, distribution day count increased to seven, and many leading stocks failed to hold logical support levels.

- Looking forward, we will shift the market to a Rally Attempt if Nifty establishes a bottom and stays above today’s low (14,249) for three straight sessions. From there, we would prefer to see a [follow-through day] before shifting the market back to a Confirmed Uptrend. Should this occur, the focus will be on ideas breaking out of the early-stage base patterns and showing the best relative strength with good accumulation.