Nifty Breaches 21-DMA; Dr Reddy’s Q2 Result Beats Estimates

Nifty, -1.3%; Sensex, -1.5%; Nifty Midcap, -1%; Nifty Smallcap, -1%; Model Portfolio, -1.3%

Market Pulse Rally Attempt

Nifty opened with modest gains but quickly slipped into negative territory. The index breached the 21-DMA, which acted as crucial support during the last two sessions. Today’s volume was higher across the board. Nifty is trading at 1.6% and 9.5% above its 50- and 200-DMA, respectively. On the sectoral front, yesterday’s top gainer, Nifty Bank, Financial Services, Realty, Metal, and Pharma closed 1.5–2.5% lower, weighing on the market. Nifty Auto closed flat, while FMCG closed 0.5% lower. Of 2,215 stocks traded, 627 advanced, 1,186 declined, and the rest remained unchanged.

Looking forward, we would like Nifty to reclaim its 21-DMA as early as tomorrow. If it fails to reclaim the 21-DMA, 50-DMA (11,530) can act as strong support. We will continue to monitor general conditions and the behavior of leading stocks looking for evidence that a real move is commencing. During this time, one should look for stocks with quality fundamentals, RS line trending higher, and breaking out from consolidation areas.

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