MarketsmithIndia Articles

Market Status Shifted to a Downtrend

February 27 2020
  • Nifty extended its decline for the fifth day in a row as the spread of coronavirus outside China fueled concerns of a global pandemic. In the process,Nifty breached all its key moving averages. The Indian market has been moved to a Downtrend, as it breached its correction low of 11,614.
  • We recommend that investors trim positions, raising cash if possible, or keep a defensive approach by holding stocks that are resilient in a falling market. Investors should consider booking profits in stocks that have performed well and have advanced 20-25% from their ideal buy points. Even if the market undergoes a small correction, these stocks are likely to fall more. Further, stocks slipping below their respective 50- and 200-DMA on above average volume should be sold. Consider exiting stocks that have declined 8% from your buy price.

  • Looking forward, we will shift the market to a Rally Attempt if Nifty establishes a bottom and stays above its recent low for three straight sessions. From there, we would prefer to see a follow-through day before shifting the market back to a Confirmed Uptrend. Should this occur, the focus will be on ideas that show the best relative strength with good accumulation. The stocks that recover the quickest tend to lead the next run. Investors should maintain a watchlist of attractive growth stocks and wait for the market to show signs of a Rally Attempt.

Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.

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Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.For more information, see our Legal disclosures here.

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