Nifty Declines Almost 300 Points; All Sectoral Indices Close in Red

Nifty, -2.4%; Sensex, -2.6%; Nifty Midcap, -1.7%; Nifty Smallcap, -1.7%; Model Portfolio, -1.5%

Market Pulse Rally Attempt

After opening above 12,000, Nifty quickly succumbed to selling pressure. Massive profit booking was seen across the sectors. Nifty lost almost 300 points following a record 10 days of gains. European markets opened sharply lower after a fresh imposition of restrictions due to the spread of COVID-19. Only 6% of Nifty50 stocks ended in the green. Bajaj Finance (-4.7%) and Tech Mahindra (-4.3%) were the major decliners in Nifty50 index.

All the sectoral indices closed in the red. Nifty Bank (-3.4%) declined the most, followed by other financial related stocks. Barring Nifty Metal (-0.5%), all the sectoral indices declined more than 1%. The advance-decline ratio was in favor of decliners. Of 2,208 stocks traded, 1,359 declined, 507 advanced, and the rest remained unchanged.

Looking forward, we would prefer to see a follow-through day before shifting the market to a Confirmed Uptrend.  A follow-through day is a solid up session, generally a 1.5% or higher gain, with volume being higher than the previous day. Should this occur, the focus will be on ideas that show the best relative strength with good accumulation. Stocks that recover the quickest tend to lead the next run. On the flip side, if Nifty breaches its recent low of 10,790, the market will be moved back to a Downtrend.