Nifty Extends Loss, Adds Distribution Day; Midcap and Smallcap Stocks Continue to Outperform

Nifty, -0.6%; Sensex, -0.7%; Nifty Midcap, +0.5%; Nifty Smallcap, +1%; Model Portfolio, +1%

Market Pulse Confirmed Uptrend

Distribution Day Count: Six

Nifty opened higher but witnessed profit booking and made a low of 15,078. However, a small buying interest in the last hour helped the index to close about 40 points off lows. The index extended the loss for the third consecutive session. Further, volume was higher than the previous session, and hence, today’s session qualified as a distribution day. The broader market continued to outperform. Midcap was up 0.5%, while Smallcap ended 1% higher.

On the sectoral front, a mixed reaction was observed. Nifty IT staged a reversal and closed with a gain of 1.3%. Nifty PSU bank continued to advance and stood as the major gainer with a gain of 5.6%. On the flip side, Nifty Auto (-1.4%) and Nifty Fin Service (-1.5%) closed in the red. Advance-decline ratio was skewed toward advancers. Out of 2,232 stocks, 1,050 advanced, 856 declined, and the remaining were unchanged.

Nifty made a new high on February 3 and moved above the previous rally high of 14,754. Hence, we changed the market status to a Confirmed Uptrend. However, the distribution day count remains elevated at five. Nifty is more than 2.5% above its 21-DMA. If 21-DMA is breached, we may downgrade the status to an Uptrend Under Pressure. Without trying to predict and decode stories, we will take what the market gives and continue to monitor unfolding conditions.