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

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.