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Nifty Adds Another Distribution Day; Broader Market Indices Underperform

June 17 2021
Today’s Action
Nifty, -0.5%; Sensex, -0.3%; Nifty Midcap, -1.2%; Nifty Smallcap, -0.5%; Model Portfolio, +0.6%.
Market Pulse: Confirmed Uptrend
Distribution Day Count: Three
Today, Nifty gapped down over 100 points. Within the first hour, it pared all of its losses and turned positive for a brief moment. But, due to weekly expiry, the session was highly volatile. From the day’s high, it lost about 150 points and made an intraday low of 15,616. In the last hour, there was little recovery to end the session near 15,700. It was a broad-based sell-off today as broader market indices Nifty Midcap (-1.2%) and Smallcap (-0.5%) underperformed.
Sectoral reaction was similar to yesterday, as barring Nifty FMCG (+0.1%) and IT (+0.6%), all sectoral indices closed lower. Nifty Metal (-2.3%) and Realty (-1.7%) declined the most followed by financial-related indices which closed 1.1-1.5% lower. The advance-decline ratio was in favor of decliners, as out of 2,260 stocks traded, 675 stocks advanced, 1,274 stocks declined, and the remaining closed flat.
Today’s action qualified as a distribution day as Nifty fell over 0.2% on volume higher than of yesterday’s. It was the second consecutive session where Nifty added distribution days, which is a weakness in the market. If the index falls, adds a distribution day, and breaches its key moving averages, we may change the market status to an Uptrend Under Pressure.  Focus on quality ideas emerging out of sound bases with RS line at or near new highs while reducing exposure to stocks breaking below key support levels.
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