Nifty Ends Volatile Session Lower, Escapes Distribution Day; IT Stocks Underperform

Posted Date: June 25 2020
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Today’s Action

Nifty, -0.16%; Sensex, -0.1%; Nifty Midcap, +0.9%; Nifty Smallcap, +0.5%; Model Portfolio, +0.7%

Market Pulse Confirmed Uptrend

Nifty had a gap-down opening this morning. However, the dip was bought and the index rebounded 150 points from opening lows. As the day progressed, Nifty erased all the intraday gains. The volatility remained high on account of monthly expiry. However, Nifty’s roller-coaster ride ended in the red as the last hour selling dragged the index lower. Though volume was higher compared with the yesterday’s session, Nifty escaped a distribution day as the loss was briefly below 0.2%. On the sectoral front, Nifty IT, Metals, and Realty lagged the most, closing 0.5–1.5% lower. On the flip side, Nifty FMCG led the day with a gain of 2%. Nifty Bank and Pharma closed 0.5–0.8% higher. Market breadth was inclined toward advancers. Of 2,125 stocks traded, 1,026 advanced, 788 declined, and the remaining traded flat.

The Indian market remains in a Confirmed Uptrend. However, things can change quickly due to high volatility. So, we will be watching the action closely with an eye to control risk and identify leadership; we will wait for solid entry points before buying. The O'Neil Methodology is a process to isolate leading stocks and buy them after a period of consolidation in order to be able to capitalize on an emerging trend. It is prudent to only invest in stocks that have strong fundamentals (i.e., good sales, earnings, margins, etc.) and that are breaking out of sound base structures on heavy volume.

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