Nifty Ends Higher in a Volatile Session; Distribution Day Count Reduces to Two

Nifty, -0.4%; Sensex, -0.3%; Nifty Midcap, -0.9%; Nifty Smallcap, -0.4%; Model Portfolio, +0.6%.

Market Pulse: Confirmed Uptrend

Distribution Day Count: Two

Weekly Market Review

Nifty started the week on a weak note as it breached its 21-DMA on Monday. Tuesday, the weakness continued, but the index found support near its 50-DMA. It then staged an upside reversal as it retook its 21-DMA on Thursday. Today, it was a highly volatile session. Opening on a flat-to-positive note, Nifty quickly succumbed to selling pressure and was down 100 points from its high within the first 30 minutes. There was some buying seen later on, which helped the index close higher.

For the week, there was a mixed reaction on the sectoral front. Nifty IT (+1.7%) was the top gainer, followed by Nifty Realty (+0.9%) and FMCG (+0.8%). On the flip side, Nifty Media, Auto, Pvt Bank, and Bank declined 2-2.6%. Today, the advance-decline ratio was in favor of decliners. Of the 2,269 stocks traded, 842 advanced, 1,103 declined, and the rest remained unchanged.

Nifty has been hovering around its 21-DMA for the last two months and reclaimed the level this week. It is crucial for the index to hold and trade above this level. Two distribution days expired during the week bringing the count down to two. On the flip side, if the index falls further and adds a couple of distribution days, 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.