Nifty Reclaims 21-DMA; Banks, Cement, and Auto Stocks Continue to Lead

Nifty, +2.6%; Sensex, +2.5%; Nifty Midcap, +2.4%; Nifty Smallcap, +1.2%; Model Portfolio, +1.8%

Market Pulse Uptrend Under Pressure

Distribution Day Count: Six

Nifty gapped higher this morning and remained strong during the first hour. It crossed 14,700, but pulled back 200 points and failed to make a new high. After the pullback, uptrend resumed and Nifty closed in the top quartile of the day’s range. Volume was also higher. Advance-decline ratio was skewed toward advancers. Out of 2,277 stocks, 1,222 advanced and 691 declined. On the sectoral front, Nifty Bank, Auto, Financial Services, and Realty closed 3.5–4.0% higher. Nifty IT, Pharma, and Metal closed around 2% higher. Nifty FMCG was a laggard in today’s rally.

Last week, market status was changed to an Uptrend Under Pressure due to a rise in distribution days and Nifty breaching its 21-DMA. The status will be back to a Confirmed Uptrend if Nifty retakes 14,754 (high during the recent rally). Yesterday, Nifty rebounded sharply from its 50-DMA and it reclaimed its 21-DMA today. Hence, we will continue to look for leadership-quality growth names to form entry points. At the same time, we will continue to monitor the market for signs of weakness if any.