Nifty Reclaims 11,000; Advances Highest in Three Months; IT, Media, and Auto Stocks Shine

Nifty, -3.9%; Sensex, -3.8%; Nifty Midcap, -5.2%; Nifty Smallcap, -5.6%; Model Portfolio, -5.2%.

Market Pulse Downtrend

Weekly Market Review

Nifty started the week on a negative note as it declined 2.2% on Monday and breached its 50-DMA for the first time since May 27. Selling pressure continued for the next three sessions. However, Nifty staged an upside reversal as it pared some its losses for the week. Today’s gain of 2.3% is the highest gain after June 1, and was led by Nifty IT (+3.5%), Media (+3.4%), and Auto (+3.4%).

During the week, we downgraded the market to a Downtrend on Tuesday. As Nifty breached its 50-DMA, distribution day count remained elevated at seven, and many leading stocks failed to hold logical support levels. All the sectoral indices closed in the red for the week. Nifty Media (-9.0%), Metal (-8.0%), and PSU Bank (-8.0%) were the biggest decliners, followed by Nifty Realty (-7.7%) and Auto (-6.0%).

Under this market conjuncture, investors should remain on the sidelines and avoid taking any fresh exposure. Further, investors already with positions open should trim their market exposure, and raise cash if possible. They should wait for the market to show credible signs of recovery and meanwhile, can observe the stocks that show resilience under falling market scenarios. Looking forward, we will shift the market to a Rally Attempt if Nifty stays above today's low (10,856) for next two 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 that show the best relative strength with good accumulation.