Nifty Starts Q2 FY21 With a Gain of 1.2%; Financial Stocks Lead the Rally

Nifty, +1.2%; Sensex, +1.4%; Nifty Midcap,+ 0.5%; Nifty Smallcap, +0.9%; Model Portfolio, -0.2%

Market Pulse Confirmed Uptrend

After a flat opening, Nifty witnessed significant buying interest and closed the session near day’s high holding solid gains. Volume was slightly higher than the previous session. In the broader market, Nifty Midcap and Smallcap closed with a gain of 0.5% and 0.9%, respectively.

On the sectoral front, results were mixed. Financial stocks led the rally driven by Nifty PSU Bank (+3.6%) which gained the most followed by Nifty Bank, Nifty Fin Services, and Nifty Pvt Bank that were up more than 2.5%. On the flip side, Nifty Pharma posted a loss of 1% coupled with Nifty Realty which declined 0.7%. Market breadth was inclined toward advancers. Of 2,125 stocks traded, 1,003 advanced, 833 declined, and the remaining traded flat.

The Indian market remains in a Confirmed Uptrend. However, things can change quickly due to high volatility. We will continue to monitor the behavior of leading stocks and keep an open mind as to how it unfolds. We will wait for solid entry points before buying. The O'Neil Methodology is a process to isolate leading stocks and buy them after a period of consolidation in order to be able to capitalize on an emerging trend. It is prudent to only invest in stocks that have strong fundamentals (i.e., good sales, earnings, margins, etc.) and that are breaking out of sound base structures on heavy volume.