Nifty Adds Distribution Day; Asian Paints Q3 Results Beat Estimates on all Fronts

Nifty, -0.4%; Sensex, -0.4%; Nifty Midcap, -1.2%; Nifty Smallcap, -0.6%; Model Portfolio, -0.6%

Market Pulse Confirmed Uptrend

Distribution Day Count: Four

Markets made a new high this morning, with Sensex moving above 50,000. However, market staged a downside reversal in the second half and closed in the red. As the volume in Nifty was higher compared with yesterday’s session, we will mark today’s session as a distribution day. The count is now elevated to four, with one set to expire next week. On the sectoral front, Nifty Auto closed flat. Rest all indices closed with a cut. Nifty PSU Bank was down 3.3%. Nifty Metal, Realty, and Pharma closed 1.5–2.5% lower. Market breadth was skewed toward decliners. Of 2,211 stocks traded, 621 advanced, 1,296 declined, and the remaining were unchanged.

With indices above relevant intermediate-term moving averages, we will continue to look for leadership-quality growth names to form entry points. At the same time, the distribution day count is at four and many stocks have breached their 21- and/or 50-DMA. In this type of market, the message is to stay the course. We will continue to monitor the market and look for signs of strength or weakness. During pullback/consolidation, it will be crucial for Nifty to hold its 21-DMA. It is advised to closely review the existing positions and book profits in stocks that are extended from their moving averages and/or showing technical weakness. Also, tracking distribution days is crucial as a rise in distribution days can halt the uptrend.