SGX Nifty Indicates Positive Opening; Nifty Likely to Test its Support at its 21-DMA

Market Preview

At 8:00am IST, the SGX Nifty Futures was trading at 11,471, compared with Nifty’s close of 11,440 yesterday. Nifty is likely to test its support at its 21-DMA. Further downside is expected if it breaches its 21-DMA.

Market status: Uptrend Under Pressure

Distribution Day Count: Seven

Global stock markets: Dow 30, +1.2%; S&P, +1.3%; Nasdaq, +1.9%; Nikkei, -0.6%; Hang Seng, +0.5%; KOSPI, +0.3%

Nifty gapped higher yesterday morning and held the gains in the first half. However, in the second half, Nifty staged a downside reversal, dropping nearly 200 points off intraday highs. Volume was higher compared with the previous session. So, we considered the session as a distribution day. Nifty breached its 21-DMA intraday but managed to close above it. The action in broader indices was very constructive. Nifty Midcap and Smallcap closed 2.6% and 5.4% higher, respectively.

On the sectoral front, Nifty IT (+4.4%) outperformed, followed by Nifty Realty (+3.7%) and Auto (+0.7%). Nifty Bank and Financial Services were top losers, closing with a cut of 1.7%. Advance-Decline ratio was skewed toward advancers. Out of 2,207 stocks traded, 1,276 advanced, 543 declined, and the rest remained unchanged.

As the market condition is in an Uptrend Under Pressure, investors should proceed ahead with caution. Unless a stock shows exceptional fundamental and technical strength, no new addition to the portfolio is advised. Investors should consider booking profits in stocks that have performed well and advanced 20–25% from their ideal buy points. Looking forward, we will change the status to a Downtrend, if more distribution days are added or if Nifty breaches its 50-DMA and 200-DMA. On the flip side, the status will be back to a Confirmed Uptrend if Nifty retakes the 11,795 level (high during the recent rally).

Key News

Procter & Gamble Health, Gujarat Apollo, and Max India will report their Q1 FY21 results today.

Pvr reported Q1 FY21 results yesterday after market hours. Revenue from operations declined 98.8% y/y to Rs 9.7 crore. It reported a loss of Rs 221.3 crore, compared with a profit of Rs 14.7 crore in Q1 FY20.

Steel Auth.Of Ida. (Nse) reported Q1 FY21 results yesterday after market hours. Revenue from operations was down 38.8% y/y to Rs 9,067.5 crore. It reported a loss of Rs 1,270.3 crore, compared with a profit of Rs 68.8 crore in Q1 FY20.

Future Retail reported Q1 FY21 results yesterday after market hours. Revenue from operations declined 73.7% y/y to Rs 1,355.2 crore. It reported a total comprehensive loss of Rs 559.9 crore, compared with a profit of Rs 162.5 crore in Q1 FY20.

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, 34%; Rally Attempt, 8%; Uptrend Under Pressure, 54%; Downtrend, 4%.

For the 24 developed markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 17%; Rally Attempt, 0%; Uptrend Under Pressure, 70%; Downtrend, 13%.