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Nifty Adds a Distribution Day; All Sectoral Indices Close Lower

June 11 2020
Today’s Action

Nifty, -2.1%; Sensex, -2.1%; Nifty Midcap, -1.3%; Nifty Smallcap, -0.9%; Model Portfolio, -1.2%

Market Pulse Confirmed Uptrend

Nifty saw a lower opening and went to end the session on a negative note. Today's session qualifies as a distribution day as the fall was on volume higher than the previous session. Around 88% of Nifty50 stocks have declined, with Bharti Infratel (-9.4%) and Zee Entertainment Ents. (-7.3%) being the major decliners.

On the sectoral front, all the indices closed lower. Nifty PSU Bank (-3.9%) and Metal (-3.8%) were the major decliners. Remaining sectors declined over 1.3%. The advance-decline ratio was inclined toward decliners. Of 2,129 stocks traded, 668 advanced, 1,134 declined, and the remaining traded flat.

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, margins, etc.) and that are breaking out of sound base structures on heavy volume.

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