Nifty Metal and Pharma Gain; Broader Markets Continue to Outperform

Nifty, +0.9%; Sensex, +0.9%; Nifty Midcap, +1.6%; Nifty Smallcap, +1.6%; Model Portfolio, +1.7%.

Market Pulse: Confirmed Uptrend

Distribution Day Count: Three

Nifty gapped higher this morning after closing lower for four straight sessions last week. Gains increased as the session processed and Nifty made a high of 17,750. However, it moved 100 points lower from there but managed to close off lows around 17,700. It should be noted that volume was comparatively lower. All the sectoral indices closed higher. Nifty Metal (+3%) was the top gainer. Nifty Bank, Financial Services, IT, Realty, and Pharma closed 1–2% higher. The advance-decline ratio was in favor of advancers. Of 2,080 stocks traded, 1,490 stocks advanced, 515 stocks declined, and the remaining closed flat.

The distribution day count currently stands at three. Further, Nifty is trading above all its key moving averages. We would like the index to continue to trade above its key moving averages. After such a sudden rally, one must also be prepared for some mild pullback and profit booking. In the process, if the index adds a couple of distribution days, stages a reversal, or breaches its key moving averages, we may change the market status to an Uptrend Under Pressure. Reducing exposure to stocks breaking below their 21- or 50-DMA on higher volume is important.

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