Nifty Stages Upside Reversal; Bajaj Twins, Tata Motors, and HDFC Outperform

Nifty, +1.7%; Sensex, +1.7%; Nifty Midcap, +2.3%; Nifty Smallcap, +1.7%; Model Portfolio, +1.2%

Market Pulse Confirmed Uptrend

Distribution Day Count: Three

Today, Indian cricket fans celebrated the historic win at the Gabba, while investors cheered gains on the D-Street. Nifty gapped higher this morning and continued its momentum through the session to close near day’s high and above 14,500. Markets were under pressure over the last two days but staged an upside reversal today. However, one should not miss to note that volume was low today. Though Nifty closed 1.7% higher, volume was lowest compared with the last nine sessions. We will not mark today’s session as an additional follow-through day.

On the sectoral front, Nifty Metal (+4.2%) was the top gainer. Nifty Bank, Auto, Financial Services, and Metal closed 1.5–3.0% higher. Market breadth was skewed toward advancers. Of 2,211 stocks traded, 1,413 advanced, 482 declined, and the remaining were unchanged.

With indices above relevant intermediate-term moving averages, we will continue to look for leadership-quality growth names to form entry points. At the same time, the distribution day count is at three and many stocks have breached their 21- and/or 50-DMA. In this type of market, the message is to stay the course. We will continue to monitor the market and look for signs of strength or weakness. During pullback/consolidation, it will be crucial for Nifty to hold its 21-DMA. It is advised to closely review the existing positions and book profits in stocks that are extended from their moving averages and/or showing technical weakness. Also, tracking distribution days is crucial as a rise in distribution days can halt the uptrend.