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Nifty Extends Loss, Adds Distribution Day; Advance Decline Ratio at 1:4

March 25 2021
Today’s Action

Nifty, -1.5%; Sensex, -1.5%; Nifty Midcap, -2%; Nifty Smallcap, -2.2%; Model Portfolio, -2.2%

Market Pulse Uptend Under Pressure

Distribution Day Count: Seven

Nifty remained highly volatile amid monthly expiry. After a flat opening, the index witnessed heavy selling pressure to trade toward the day’s low of 14,264. From there, Nifty posted a solid recovery of about 230 points intraday; however, the rise was sold by market participants, resulting in the index close near 14,320. Further, Nifty added a distribution day as the index fell more than 0.2% on higher volume compared with the previous session. In the broader market, Nifty Midcap declined 2% and Small cap closed 2.2% lower.

On the sectoral front, barring Nifty Metal, the majority of sectors closed in the red. Nifty Media (-3%) was the major decliner. Similarly, Nifty PSU Bank, Nifty Auto, Nifty FMCG, Nifty IT, and Nifty Realty closed lower in the range of 2.0–3.0%. The advance-decline ratio was in favor of decliners. Of 2,248 stocks traded, 367 advanced, 1,544 declined, and the rest remained unchanged.

Market Status Overview

-Currently, the distribution day count stands at seven. However, due to aging, one distribution day is set to expire tomorrow. Further, the volume of index during the correction has been kept lower as against average volumes over the last 50-days.

- We will change the status to a Downtrend, if one more distribution day is added or if Nifty breaches its 100-DMA and if market leaders continue to show signs of deterioration in their price actions.

-Investors should consider booking profits in the stocks that have performed well and have advanced 20–25% from their ideal buy points. Even if the market undergoes a small correction, these stocks are more likely to consolidate and test their moving averages. Further, stocks slipping below their 50- and 200-DMA on above average volume should be sold. Consider exiting stocks that have declined 8% from your buy price.

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

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