Nifty Reclaims 21- and 50-DMA; IT, Metals, and Pharma Stocks Lead Rally

Nifty, +2.3%; Sensex, +2.3%; Nifty Midcap, +1.7%; Nifty Smallcap, +1.3%; Model Portfolio, +3.3%

Market Pulse Uptrend Under Pressure

Distribution Day Count: Six

Nifty, after a gap up opening of about 120 points, kept its gaining momentum intact throughout the session. It formed higher highs and higher lows in the hourly chart and closed the day holding significant gains. In the process, the index reclaimed both 21- and 50-DMA. Volume was higher compared with the previous session. In the broader market, Nifty Midcap advanced 1.7% and Small cap closed 1.3% higher.

On the sectoral front, barring Nifty Realty, all the sectors closed in the green. Nifty IT (+3.1%) was the major gainer for the day. Similarly, Nifty Pharma, Nifty Metal, and Nifty FMCG closed higher in the range of 2.0–3.0%. The advance-decline ratio was in favor of advancers. Of 2,291 stocks traded, 1,015 advanced, 900 declined, and the rest remained unchanged.

Market Status Overview

The index reclaiming its key moving averages indicates the signs of strength in the market. From here, we would like the index to hold its key moving averages and trade above it. On the flip side, we will change the status to a Downtrend, if one more distribution day is added or if Nifty breaches 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-DMA and 200-DMA on above average volume should be sold. Consider exiting stocks that have declined 8% from your buy price.