Nifty Breaches 21-DMA; Metal and Banking Stocks Underperform

Nifty, -1.00%; Sensex, -0.90%; Nifty Midcap, -0.40%; Nifty Smallcap, -0.04%; Model Portfolio, +0.10%

Market Pulse: Confirmed Uptrend

Distribution Day Count: Four

Today, Nifty opened briefly in the red and came under selling pressure in the first hour of trading. It continued to slip further, breached 21-DMA, and dropped below 15,700. However, in the last hour, Nifty recovered more than 50 points from its low, but closed below its 21-DMA. Volume was lower compared to that in yesterday’s session, so we will not mark it as a distribution day. The broader market outperformed benchmark indices. The advance-decline ratio was in favor of decliners. Out of 2,265 stocks traded, 748 stocks advanced, 1,170 stocks declined, and the remaining closed flat. On the sectoral front, barring Nifty IT (+0.1%), all indices closed in the red. Nifty Bank, Auto, Metal, and Financial Services closed 1–2% lower.

The distribution day count is currently elevated to four. Nifty closed below its 21-DMA. However, the volume was lower. If the index falls further and adds a distribution day, we may change the market status to an Uptrend Under Pressure. We continue to recommend a selective approach to increasing risk. Focus on quality ideas emerging out of sound bases with RS line at or near new highs while reducing exposure to stocks breaking below key support levels.

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