Market Pulse: Confirmed Uptrend
Distribution Day Count: Nifty50 - Four Nifty Midcap100 - Four Nifty Smallcap100 - Six
Global stock markets: Dow 30, +0.7%; Nasdaq, +1.2%; S&P 500, +0.8%; Nikkei, +1.7%; Kospi, +1.5%; Shanghai Composite, +1.2%.
Last week, Nifty had hit new highs for three consecutive sessions. Friday, the index gapped lower, below 16,400. However, it was a knee-jerk reaction and the index recovered around 150 points in the first hour itself. It was a volatile session with Nifty moving in the range of 16,400–16,500 during the day. We marked Friday's session as a distribution day as the loss was more than 0.2% on volume higher than in the previous session.
During the week, the broader market remained weak. Midcap and smallcap underperformed the index and declined 1.7% and 3.4%, respectively. Barring Nifty FMCG (+4.8%) and IT (+2%), all sectoral indices closed lower for the week. Metal (-8%) was the top loser. Nifty Auto, Bank, Energy, and Pharma closed 1.5–3.0% lower.
Currently, the distribution day count stands at four. Nifty is trading near its all-time high. If the index adds a couple of distribution days, stages a reversal, or breaches its key moving averages, we may change the market status to an Uptrend Under Pressure. Reducing exposure to stocks breaking below their 21- or 50-DMA on higher volume is important. Over the last few sessions, the broader market seems to have fallen out of favor. Some stocks are showing poor price behavior, resulting in minor damage to their charts. Shakeouts happen and are a normal course for growth stocks. But we do not want weak action to persist. We recommend being selective when investing in new stock.
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