Nifty Falls Sharply, Finds Support at 21-DMA; Distribution Day Count Reaches Four

Nifty, -3.1%; Sensex, -3%; Nifty Midcap, -4.8%; Nifty Smallcap, -5%; Model Portfolio, -3.4%

Market Pulse Confirmed Uptrend

Distribution Day Count: Four

Nifty opened lower and traded in a narrow range for the first half of the trading session. In the second half, the index witnessed significant profit booking and fell sharply to find support at its 21-DMA. Volume was higher than in the previous session. Today’s session qualified as a distribution day as the index fell more than 0.2% on volume higher than the previous session. In the broader market, midcap closed 4.8% lower, while smallcap closed with a loss of 5%.

On the sectoral front, all the sectors closed in the red. Nifty PSU Bank (-6.9%) declined the most, followed by Nifty Media and Metal, which declined by 6.2% and 5.5%, respectively. Further, Nifty Auto, Bank, Finservice, Pharma, PVT Bank, and Realty were down in the range of 3–4%. The IT sector showed resilience and closed 1.7% lower. Market breadth was skewed toward decliners. Of 2,233 stocks traded, 254 stocks advanced, 1,687 declined, and the remaining stocks remained unchanged.

Looking ahead, we would like the index to hold its 21-DMA and rebound from there. It is advised to closely review the existing positions and book profits in stocks that are extended from their moving averages and showing technical weakness. Also, tracking distribution days is crucial. If the distribution day is elevated further, it can halt the uptrend.