MarketsmithIndia Articles

Nifty Stages an Upside Reversal; Energy, Metal, and FMCG Stocks Outperform

March 19 2021
Weekly Action

Nifty, -1.9%; Sensex, -1.8%; Nifty Midcap, -2.9%; Nifty Smallcap, -3.3%; Model Portfolio, -4.2%.

Market Pulse Uptend Under Pressure

Distribution Day Count: Six

Weekly Market Review

Nifty started the week on a negative note and closed below its 21-DMA on Monday. Selling pressure intensified as the week passed and pushed Nifty below its 50-DMA on Wednesday. Market status was downgraded to an Uptrend Under Pressure. Today, after a gap-down opening, Nifty staged an upside reversal and reclaimed its 50-DMA (intraday) but closed briefly below it. Also, today’s volume was the highest in March. Advance-decline ratio was in favor of advancers. Out of 2,238 stocks, 997 advanced, 875 declined, and the rest remained unchanged.

On a weekly basis, barring Nifty FMCG (+2.9%), all other sectoral indices closed in the red. Nifty Realty (-5.9%) was the top loser. Nifty Pharma, Bank, and Financial Services closed 3–4% lower.

Market Status Overview

On Wednesday, we downgraded the market status to an Uptend Under Pressure as the distribution day count increased. Also, Nifty had breached its 21-DMA on Monday and its 50-DMA on Wednesday. Currently, the distribution day count stands at six. Though today’s upside reversal was a good sign, we will wait for Nifty to close above its 21- and 50-DMA for a fresh entry. We will change the status to a [Downtrend], if one more distribution day is added or if Nifty fails to reclaim its 50-DMA and market leaders show signs of deterioration in their price actions.

Investors should consider booking profits in the 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. On the flip side, a stock can be held if it is holding around its key moving averages and is resilient in a falling market with low volume activity.

What do you think? Please email us any questions or comments.

Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.For more information, see our Legal disclosures here.

Related Article

Loading...