MarketsmithIndia Articles

Nifty Stages Downside Reversal; Kotak Bank Beats Q2 Estimates

October 26 2020
Today’s Action

Nifty, -1.4%; Sensex, -1.3%; Nifty Midcap, -1.7%; Nifty Smallcap, -1%; Model Portfolio, -1.8%

Market Pulse Rally Attempt

Nifty opened with modest losses. It moved sideways in early hours, but selling pressure intensified in the second half, dragging it below 11,800. Nifty closed less than a percent above its 21-DMA. Nifty is trading 2.3% and 10% above its 50- and 200-DMA, respectively. Today’s volume was a little higher than Friday’s session. On the sectoral front, Nifty Auto and Metal closed with a loss of more than 3%. Nifty Bank, Financial Services, Pharma, and IT closed 1–2% lower. The selling was broad-based. Of 2,229 stocks traded, 1,219 advanced, 645 declined, and the rest remained unchanged. INR continued to depreciate and closed at Rs 73.85 per USD.

Looking forward, we prefer to see a follow-through day before shifting the market to a Confirmed Uptrend. A follow-through day is a solid up session, generally a 1.5% or higher gain, with volume being higher than the previous day. However, we are positive on the general market as we can find further evidence of good behavior in leaders that have already broken out; for example, HDFC Bank, Reliance, Infosys, and Asian Paints. During this time, one should look for stocks with quality fundamentals, RS line trending higher, and breaking out from consolidation areas.

 
 

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