Nifty Adds a Distribution Day; Nifty IT and Broader Market Outperform

Nifty, -0.2%; Sensex, -0.3%; Nifty Midcap, +2.6%; Nifty Smallcap, +5.4%; Model Portfolio, +1.5%

Market Pulse Uptrend Under Pressure

Distribution Day Count: Seven

Nifty gapped higher this 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. The volume was higher compared with the previous session. So, we will consider today’s 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 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 have 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 the 50-DMA (11,202) and the 200-DMA (10,791). On the flip side, the status will be back to a Confirmed Uptrend if Nifty retakes 11,795 level (high during the recent rally).