Nifty, +1.6%; Sensex, +1.6%; Nifty Midcap, +3%; Nifty Smallcap, +3.6%; Model Portfolio, +1.9%
Market Pulse Downtrend
Nifty, after a gap-up opening, kept the bullish momentum intact throughout the day. The index formed higher highs in the hourly chart and closed the upward trending session holding solid gains. In the process, Nifty moved closer to its 50-DMA and is just short of 0.7% to reclaim it. Last Tuesday, we moved the market to a Downtrend as Nifty breached its 50-DMA, distribution day count remained elevated at seven, and many leading stocks failed to hold logical support levels. However, Nifty was able to stay above correction low (10,791) in last Friday and today’s session. We will shift the market to a Rally Attempt if Nifty stays above correction low tomorrow as well. From there, we would prefer to see a follow-through day before shifting the market back to a Confirmed Uptrend. Should this occur, the focus will be on ideas that show the best relative strength with good accumulation. In the broader market, both midcap and smallcap outperformed the major index and closed 3% and 3.6% higher, respectively.
On the sectoral front, all the indices closed in the green. Nifty Media (+4.8%) advanced the most. Nifty Bank, Auto, PSU bank, PVT bank, and Realty advanced in the range of 3–4%. Advance-decline ratio was in favor of advancers. Out of 2,216 stocks traded, 1,403 advanced, 453 declined, and the rest remained unchanged. Under this market conjuncture, investors should remain on the sidelines and avoid taking any fresh exposure. Investors should prepare a watchlist of quality names with a strong fundamental profile. Such companies generally have consistent sales and earnings growth, high return on equity, and rising institutional sponsorship.