Nifty Turns Volatile on Weekly F&O Expiry; Financials Drag, Metals Shine

Nifty, +0.4%; Sensex, +0.2%; Nifty Midcap, +0.5%; Nifty Smallcap, +1.2%; Model Portfolio, +1.4%

Market Pulse: Uptend Under Pressure

Distribution Day Count: Six

Nifty opened higher and remained in the green throughout the day. However, it was highly volatile during the session on account of weekly F&O expiry. At one point, Nifty was up over 1% but it quickly pared gains and ended just 0.4% higher. Of Nifty50 stocks, 62% of the stocks closed in the green led by Jsw Steel (+9.2%) and Tata Steel (+4.9%).

On the sectoral front, the majority of indices closed in the green. Nifty Metal (+3.9%) advanced the most followed by IT (+1.2%). Financial related sectors continued to drag the market down. Broader market outperformed the benchmark indices. The advance-decline ratio was in favor of advancers. Of 2,254 stocks traded, 1,233 advanced, 668 declined, and the rest remained unchanged.

Market Status Overview

Yesterday, Nifty reclaimed its 21- and 50-DMA, and managed to close above it. However, the distribution day count remains high at six. If Nifty remains above moving averages and advances from there, focus on quality ideas, ideally from leading and/or improving sectors and groups that are emerging from constructive consolidation. Avoid or reduce risk in lagging ideas, trading below major moving averages.

On the flip side, we will change the status to a Downtrend, if Nifty breaches its 50-DMA and if market leaders show signs of deterioration in their price actions. If that happens, investors should consider booking profits in stocks that have performed well and have advanced 20–25% from their ideal buy points. Further, stocks slipping below their 50- and 200-DMA on above average volume should be sold. Consider exiting stocks that have declined 8% from your buy price.