Nifty Adds Distribution Day; Auto and Cement Stocks Underperform

Nifty, -0.4%; Sensex, -0.3%; Nifty Midcap, -0.8%; Nifty Smallcap, -0.5%; Model Portfolio, -0.5%

Market Pulse Confirmed Uptrend

Distribution Day Count: Three

Nifty opened lower this morning and slipped further in the opening hour. However, it found support near 13,400 and traded near it during the day. In the last hour, Nifty came off-lows and closed just 0.4% lower. As the volume was higher compared with yesterday’s session, we will consider it as a distribution day. Broader markets underperformed as Midcap and Smallcap indices declined 0.5–0.8%. Nifty is trading 3.5% and 9.2% above its 21- and 50-DMA. On the sectoral front, Nifty FMCG outperformed and closed 2.8% higher. Nifty Bank, Auto, and Financial Services closed 0.5–1.0% lower, while Nifty IT and Metal closed relatively flat. Market breadth was skewed toward decliners. Out of 2,214 stocks traded, 723 stocks advanced, 1,173 declined, and the remaining stocks unchanged.

With leadership broadening and indices above relevant intermediate term-moving averages, we will continue to look for leadership-quality growth names to form entry points. After a strong rally, pullback/consolidation (if any) is a constructive sign if Nifty holds its 21-DMA. It is advised to closely review the existing positions and book partial profits in stocks that are extended from their moving averages. On the flip side, tracking distribution days is crucial. Accumulation of distribution days can halt the uptrend.