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Nifty Manages to Close in the Green; Financials Continue to Decline

April 06 2021
Today’s Action

Nifty, +0.3%; Sensex, +0.1%; Nifty Midcap, +0.9%; Nifty Smallcap, +1.4%; Model Portfolio, +2.1%

Market Pulse: Uptend Under Pressure

Distribution Day Count: Seven

Nifty opened 100 points higher and it advanced further to make intraday high of 14,779. As with the previous few sessions, it succumbed to selling pressure to turned negative intraday. Later some buying helped the index to close with a gain of 0.3%. Of Nifty50 stocks, 62% of the stocks advanced, led by Adani Ports and Special Economic Zone (+12.6%) and Tata Consumer Products (+4.6%). On the flip side, Power Grid Corp.Of India (-2.3%) and Grasim Industries (-0.9%) were the major decliners.

Barring Nifty Media and financial-related sectors, all the sectoral indices closed in the green. Nifty Pharma (+1.8%) and Metal (+1.4%) were the top advancers. The advance-decline ratio was in favor of advancers. Of 2,255 stocks traded, 1,157 advanced, 736 declined, and the rest remained unchanged.

Market Status Overview

- Nifty breached its 21- and 50-DMA yesterday, after hovering around its key moving averages in the past few weeks. Index breaching its moving averages is a sign of weakness. Today, it found resistance around its 50-DMA. We will change the status to a Downtrend, if Nifty doesn’t retake its 50-DMA and if market leaders show signs of deterioration in their price actions.

- Under current market conjecture, since we are in an Uptrend Under Pressure with higher number of distribution days, investors should consider booking profits in 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.

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