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

Nifty, -1.6%; Sensex, -1.7%; Nifty Midcap, -0.9%; Nifty Smallcap, -2.7%; Model Portfolio, +1%.

Market Pulse Uptrend Under Pressure

Distribution Day Count : Six

Weekly Market Review

Nifty started the week with a muted action. However, on Wednesday and Thursday, Nifty was down around 500 points and added a distribution day on Thursday. Nifty staged an upside reversal today and closed the week above 14,500. It is trading 2.2% and 1.6% below its 21-and 50-DMA, respectively. Today, the distribution day count was reduced to six as one distribution day expired. Further, the volume on index when the market corrected  was lower compared with average volumes over the last 50-days. Today, advance-decline ratio was in favor of advancers. Out of 2,238 stocks, 1,145 advanced, 741 declined, and the rest remained unchanged.

On a weekly basis, barring Nifty Pharma (+2.5%) and Metal (+0.6%), all other sectoral indices closed in the red. Nifty Bank, Auto, and Energy closed 2.5–4.0% lower.

Market Status Overview

-We will change the status to a Downtrend, if one more distribution day is added or if Nifty breaches its 100-DMAand if market leaders continue to show signs of deterioration in their price actions. On the flip side, Nifty reclaiming its 50-DMA will be positive.

-Investors should consider booking profits in 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.