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Nifty Reverses Gain after a Gap-up Opening; Metal Stocks Outperform

August 05 2020
Today’s Action

Nifty, +0.1%; Sensex, -0.1%; Nifty Midcap, +0.6%; Nifty Smallcap, +1.1%; Model Portfolio, +0.5%

Market Pulse Confirmed Uptrend

After a gap-up opening, Nifty remained in positive momentum in the first hour. However, it slipped more than 150 points from its intraday high but managed to close in positive territory. Volume was higher compared with yesterday’s session when selling pressure was high. Though benchmark indices were under pressure, Nifty Midcap (+0.6%) and Smallcap (+1.1%) progressed well. Market breadth was skewed toward advancers. Of 2,164 stocks traded, 1,156 advanced, 664 declined, and the remaining traded flat. On sectoral front, Nifty Metal (+4.2%) and Auto (+2.1%) outperformed. For the rest of sectors, action was mixed and muted. Nifty Bank, Financial Services, and IT closed in the green, while Nifty FMCG and Pharma closed in the red. Nifty closed more than 1% above its upward trending 21-DMA (10,980). We would like to see Nifty hold its 21-DMA. In case distribution day count increases and Nifty breaches its 21- and 200-DMA, we may downgrade the market to an Uptrend Under Pressure.

The Indian market remains in a Confirmed Uptrend. We would like to see fresh names flexing their muscles for a sustainable rally. Finding favorable entries into powerful breakouts may be the best use for new money in the current market. However, things can change quickly due to high volatility. We are operating in an uncertain environment where information is distributed unevenly, wherein outside forces, either intentionally or unintentionally, affect prices across various time frames. We will continue to monitor the behavior of market and keep an open mind as to how it unfolds.

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