Nifty Reclaims 21-DMA; Metal and IT Stocks Lead Gains

Nifty, +1.2%; Sensex, +1.2%; Nifty Midcap, +1.1%; Nifty Smallcap, +1.5%; Model Portfolio, +0.9%

Market Pulse: Confirmed Uptrend

Distribution Day Count: Four

Nifty rebounded strongly after testing its 50-DMA on Tuesday. The index regained its 21-DMA and is just 1% off highs. Volume was relatively low. The distribution day count is down to three as one expired today. Another distribution day is set to expire on market close tomorrow. The broader market also performed well. On the sectoral front, all indices closed higher. Nifty IT, Metal, Realty, and Financial Services gained 1.5–2.5%. The advance-decline ratio was in favor of advancers. Out of 2,268 stocks traded, 1,338 stocks advanced, 615 stocks declined, and the remaining closed flat.

A low distribution day count and Nifty trading above key moving averages is a positive setup. On the flip side, if the index breaches key moving averages on higher volume and adds a couple of distribution days, we may change the market status to an Uptrend Under Pressure. We continue to recommend a selective approach to increasing risk. Focus on quality ideas emerging out of sound bases with RS line at or near new highs while reducing exposure to stocks breaking below key support levels.

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