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Nifty Breaches its 21-DMA; PSU Bank Index Declines Around 9% During the Week

September 04 2020
Weekly Action

Nifty, -2.7%; Sensex, -2.8%; Nifty Midcap, -2.6%; Nifty Smallcap, -3.2%; Model Portfolio, -3.9%.

Market Pulse Uptrend Under Pressure

Distribution Day Count: Five

Weekly Market Review

Nifty started the week on a weak note as it fell more than 2.2% and found support at its 21-DMA on Monday. In the next four sessions, volume of shares traded dried up relatively. Today, it succumbed to selling pressure, taking cues from global markets. Selling was seen across the sectors, with Maruti Suzuki India (+1.7%) being the only advancer for the day.

During the week, all the sectoral indices closed lower, led by Nifty PSU Bank (-8.9%) and other financial related sectors. Realty (-5.5%) and Energy (-3.4%) also succumbed to selling pressure.

Today’s action qualified as a distribution day as the fall was more than 0.2% on volume higher than the previous session. During the week, the index added two distribution days (Monday and Friday). However, July 30 distribution day expired yesterday.  Overall, it has five distribution days.

As the market condition has changed to an Uptrend Under Pressure, investors should proceed ahead with caution. Unless a stock shows exceptional fundamental and technical strength, no new addition to the portfolio is advised. Investors should consider booking profits in stocks that have performed well and advanced 20–25% from their ideal buy points. Looking forward, we will change the status to a Downtrend, if more distribution days are added or if Nifty breaches its 50- and 200-DMA. On the flip side, the status will be back to a Confirmed Uptrend if Nifty retakes 11,795 level (high during the recent rally).

What do you think? Please email us any questions or comments.

Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.For more information, see our Legal disclosures here.

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