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Nifty Makes a New All-Time High During the Week; Auto and BFSI Stocks Lead, Pharma Lags

November 20 2020
Weekly Action

Nifty, +1.1%; Sensex, +1%; Nifty Midcap, +3.3%; Nifty Smallcap, +2.3%; Model Portfolio, +2.5%.

Market Pulse Confirmed Uptrend

Distribution Day Count: One

Weekly Market Review

The market continued its positive momentum in the first week of Samvat 2077. Nifty edged higher and made a fresh all-time high of 12,963 during the week. However, it staged a downside reversal on Thursday and added a distribution day. Today, it recouped some of its yesterday’s losses as banking and financial stocks led the gains. Currently, Nifty is trading 8.4% and 20% above its 50- and 200-DMA, respectively. The momentum in the market was broad based. A reasonable amount of quality stocks are breaking out of their early stage consolidation bases. On the sectoral front, Nifty Auto (+4.5%) was the top gainer. Nifty Bank, Financial Services, Metal, and Realty were up 2.5–4.0%. Nifty FMCG closed 0.7% higher, while IT closed flat. On the flip side, Nifty Pharma (-1.5%) was the laggard.

We are in a Confirmed Uptrend but need to be prudent and cautious while adding fresh positions, as Nifty is currently trading ~20% above its 200-DMA, which is rare. We might expect some pullback in the market. However, a small pullback/consolidation is a constructive sign if Nifty holds its 21-DMA. It is advised to closely review the existing positions and book partial profits in stocks that are extended from their moving averages. We will look for leadership among some good stocks to push the market up. On the flip side, tracking distribution days is crucial. Accumulation of distribution days can halt the uptrend.

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