Nifty Breaches 21-DMA, Adds Distribution Day; Private Bank Stocks Decline Sharply

Nifty, -1.6%; Sensex, -1.8%; Nifty Midcap, 0.0%; Nifty Smallcap, +1%; Model Portfolio, 0.0%

Market Pulse Confirmed Uptrend

Today, Nifty opened with a cut of 20 points. The selling pressure intensified as the day wore on and Nifty breached its 21-DMA (10,950). This is the fourth consecutive day when Nifty closed in the red and in the lower half of the day’s range. It added a distribution day as the volume was higher compared with yesterday’s session, taking the count to three. The selling was concentrated among private banks, financial stocks, and RIL. Pharma stocks continued to outperform but closed off highs. The selling was not broad based. Nifty Midcap closed flat, while Smallcap closed 1% higher. Market breadth was inclined toward advancers. Of 2,197 stocks traded, 974 advanced, 834 declined, and the remaining traded flat. Nifty closed near its 200-DMA (10,856). We would like to see Nifty holding its 200-DMA. In case distribution day count increases and Nifty breaches its 200-DMA, we may downgrade the market status to an Uptrend Under Pressure.

The Indian market remains in a Confirmed Uptrend. However, things can change quickly due to high volatility. We are operating in an uncertain environment where information is distributed unevenly, wherein outside forces, either intentionally or unintentionally, affect prices across various time frames. We will continue to monitor the behavior of leading stocks and keep an open mind as to how it unfolds. We will wait for solid entry points before buying.