Nifty Adds Distribution Day; IT, FMCG, and Pharma Stocks Drag

Today’s Action

Nifty, -0.4%; Sensex, -0.5%; Nifty Midcap, +0.6%; Nifty Smallcap, -0.04%; Model Portfolio, +0.4%

Market Pulse Confirmed Uptrend

Distribution Day Count: Three

Nifty, after a gap up opening, traded sideways and pared the opening gains in the first half of the trading session. Later, it witnessed profit booking and traded toward the day’s low of 14,040. However, buying in the last hour helped the index close near 14,150. Volume was higher than the previous session. Also, today’s action qualified as a distribution day as the index fell more than 0.2% on higher volume than the previous session. This takes the distribution day count to three. In the broader market, Midcap closed 0.6% higher, while smallcap ended flat.

It was a mixed reaction on the sectoral front. Nifty Metal (+1.3%) advanced the most followed by Nifty Realty which was up 0.7%. On the flip side, Nifty IT (-1.4%) declined the most followed by FMCG (-1.1%) and Pharma (-0.4%). Market breadth was skewed toward decliners. Of 2,222 stocks traded, 869 advanced, 1,049 declined, and the remaining were 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. If a pullback/consolidation happens, 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 showing technical weakness. Also, tracking distribution days is crucial as rise in distribution days can halt the uptrend.