Nifty Stages Downside Reversal; INR Depreciates to 75 per USD

Nifty, -1%; Sensex, -0.9%; Nifty Midcap, -0.9%; Nifty Smallcap, -0.8%; Model Portfolio, -0.7%.

Market Pulse: Confirmed Uptrend

Distribution Day Count: Three

Nifty opened around 35 points higher and made a high of 17,884 in the opening hour. However, it failed to hold gains and the selling pressure intensified in the second half. The market escaped a distribution day as the volume was lower compared with the yesterday’s session. Nifty closed in the bottom quartile of the day’s range. Nifty is still around 50 points above its 21-DMA. It is important to hold that level. On the sectoral front, all the indices closed lower. Nifty Metal, Pharma, PSU Bank, and Realty were down 1.5–3.0%. Nifty Bank, Auto, Financial Services, FMCG, and IT closed 0.3–1.3% lower. The advance-decline ratio was in favor of decliners. Of 2,054 stocks traded, 693 stocks advanced, 1,294 stocks declined, and the remaining closed flat.

The distribution day count currently stands at three. Further, Nifty is trading above all its key moving averages. We would like the index to continue trading above its key moving averages. After such a sudden rally, one must also be prepared for some mild pullback and profit booking. In the process, if the index adds a couple of distribution days, stages a reversal, or breaches its key moving averages, we may change the market status to an Uptrend Under Pressure. Reducing exposure to stocks breaking below their 21- or 50-DMA on higher volume is important.

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