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Nifty Adds a Distribution Day; Auto, Realty, and IT Stocks Weigh

July 08 2020
Today’s Action

Nifty, -0.9%; Sensex, -0.9%; Nifty Midcap,-0.4%; Nifty Smallcap, -0.2%; Model Portfolio, -0.8%

Market Pulse : Confirmed Uptrend

After a flat opening, Nifty traded in a narrow range. However, it succumbed to selling pressure in the last hour of the trading session and fell sharply to close the day, holding significant losses. Today’s session qualified as a distribution day as the index fell more than 0.2% on higher volume than that of the previous session. In the broader market, Nifty Midcap and Smallcap closed with a loss of 0.4% and 0.2%, respectively.

On the sectoral front, results were mixed. Nifty Auto and Nifty Realty declined 2% each. Further, Nifty IT and Nifty Media were down in the range of 1.5–2%. On the other hand, Nifty PSU Bank gained more than 2%, while Nifty Pharma, Nifty FMCG, and Nifty Metal advanced in the range of 0.5–1.6%. Market breadth was inclined toward decliners. Of 2,126 stocks traded, 784 advanced, 1,054 declined, and the remaining traded flat.

The Indian market remains in a Confirmed Uptrend. However, things can change quickly due to high volatility. We will continue to monitor the behavior of leading stocks and keep an open mind as to how it unfolds. We will wait for solid entry points before buying. The O'Neil Methodology is a process to isolate leading stocks and buy them after a period of consolidation in order to be able to capitalize on an emerging trend. It is prudent to 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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