At 8:00 am IST, the SGX Nifty Futures was trading at 10,277, compared with Nifty’s close of 10,288 yesterday.
Market status: Confirmed Uptrend
Global stock markets: Dow 30, +1.2%; S&P 500, +1.1%; Nasdaq, +1.1%; KOSPI, +0.8%; Nikkei, +1.1%; Hang Seng, -0.5%; Shanghai Composite, +0.3%.
Nifty had a gap-down opening yesterday morning. However, the dip was bought and the index rebounded 150 points from opening lows. As the day progressed, Nifty erased all the intraday gains. Volatility remained high on account of monthly expiry. However, Nifty’s roller-coaster ride ended in the red as last-hour selling dragged the index lower. Though volume was higher compared with the previous session, Nifty escaped a distribution day as the loss was briefly below 0.2%.
On the sectoral front, Nifty IT, Metals, and Realty lagged the most, closing 0.5–1.5% lower. On the flip side, Nifty FMCG led the day with a gain of 2%. Nifty Bank and Pharma closed 0.5–0.8% higher. Market breadth was inclined toward advancers. Of 2,125 stocks traded, 1,026 advanced, 788 declined, and the remaining traded flat.
It is crucial for Nifty to not breach its 100-DMA for the rally to continue. On the other hand, if we see Nifty add more distribution days, breaching key moving averages, and begin to see leaders falter at support, we will likely shift the market status to an Uptrend Under Pressure.
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. We always look for stocks with strong relative strength. But investors should understand that it is not prudent to blindly buy stocks that have a high relative strength or simply because they have been performing well. This is the essence of momentum investing, and it can get you into trouble. Rather, one should base buying decisions on sound fundamental and technical analysis. Only invest in stocks that have strong fundamentals (i.e., good sales, earnings, and margins, among others) and that are breaking out of sound base structures on heavy volume.
Ashok Leyland reported Q4 FY20 results yesterday after market hours. Revenue from operations declined 56.7% y/y to Rs 3,838 crore. It reported a loss of Rs 57 crore compared with Rs 652 crore in the corresponding quarter last year.
Ion Exchange India announced Q4 FY20 results yesterday. Revenue from operations decreased 16.6% y/y to Rs 362 crore. PAT declined 20.3% to Rs 28.7 crore.
O’Neil Market Condition Report
For the 24 emerging markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 72%; Rally Attempt, 0%; Uptrend Under Pressure, 28%; Downtrend, 0%.
For the 24 developed markets tracked by our institutional research team, the market status breakdown is as follows:Confirmed Uptrend, 24%;Rally Attempt, 0%; Uptrend Under Pressure, 76%;Downtrend, 0%.