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Nifty Reclaims its 100-DMA; Media and Banking Stocks Rally

Posted Date: June 19 2020
Weekly Action

Nifty, +2.7%; Sensex, +2.8%; Nifty Midcap, +1.6%; Nifty Smallcap, +4.2%; Model Portfolio, +0.4%.

Market Pulse Confirmed Uptrend

Weekly Market Review

Bullish trend resumed as Nifty advanced 2.7% during the week. For the first time since February 24, Nifty retook its 100-DMA today. For Nifty, 100-DMA is a crucial level compared with other moving averages. Today’s action qualifies as an additional follow-through-day as Nifty advanced 1.5% on volume higher than the previous session.

On the sectoral front, barring Nifty FMCG (-1.5%), all the indices closed higher for the week. Nifty Media (+7.8%) was the biggest advancer followed by Nifty PSU Bank (+5.0%) and Energy (+4.9%).

The Indian market remains in a Confirmed Uptrend. However, we will be watching the action closely with an eye to control risk and identify leadership; we will wait for solid entry points develop before buying. Nifty holding 100-DMA (10,098) is important. If Nifty adds distribution days and breaches logical support levels, we may downgrade the market status to an Uptrend Under Pressure. It is prudent to only invest in stocks that have strong fundamentals (i.e., good sales, earnings, margins, etc.) and that are breaking out of sound base structures on heavy volume. The beauty of our CAN SLIM method is that we need not "expect," "hope," or "wish for" with respect to market action. We will take what the market gives us and continue to monitor unfolding conditions.

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