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Nifty Reclaims 21-DMA; Pharma and Banking Stocks Outperform

Posted Date: May 05 2021
Today’s Action
Nifty, +0.8%; Sensex, +0.9%; Nifty Midcap, +1%; Nifty Smallcap, +0.4%; Model Portfolio, +1%
Market Pulse: Confirmed uptrend
Distribution Day Count: Two
Nifty gapped higher and managed to hold gains. In the last hour, it further moved higher and closed near day’s high. Volume was relatively lower. Today, Nifty reclaimed its 21-DMA and is now trading less than 1% below its 50-DMA. Broader market was also in momentum. Nifty Next50 is now only about 2% below its all-time high. The advance-decline ratio was in favor of advancers. Of the 2,250 stocks traded, 1,198 advanced, 627 declined, and the rest remained unchanged.
On the sectoral front, barring Nifty Realty (-1%), all other sectors closed in the green. Nifty Pharma (+4%) was the top gainer, followed by Nifty Bank (+1.5%). These were in momentum as RBI announced to provide immediate liquidity for ramping up COVID-19-related healthcare infrastructure and services by providing an on-tap liquidity window of Rs 50,000 crore with tenors of up to three years. Also, RBI opened a second window for the individual and small borrowers having loans up to Rs 25 crore for restructuring (if not availed earlier).
Looking ahead, without trying to predict and decode stories, we will take what the market gives and continue to monitor unfolding conditions. If Nifty falls further and adds a couple of more distribution days, we may change the market status to an Uptrend Under Pressure. On the flip side, if Nifty reclaims its 50-DMA and moves higher, stocks that are breaking out of consolidation with higher relative strength and superior fundamentals can do well. Continue to trim or avoid ideas lagging and/or breaking down below major moving averages.
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