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Nifty Tests its 21-DMA; Metal Stocks Continue to Rally

August 14 2020
Weekly Action

Nifty, -0.3%; Sensex, -0.4%; Nifty Midcap, +1.7%; Nifty Smallcap, +2.0%; Model Portfolio, +4.5%.

Market Pulse Confirmed Uptrend

Weekly Market Review

Nifty traded in a narrow range for the first four trading sessions. On Friday, it was slightly volatile and fell 1.1% on volume higher than Thursday’s session. Today’s action qualifies as a distribution day and hence the count increased to three. Increased distribution indicates weakness in the market. Today, Nifty found support at its 21-DMA after breaching it intraday.

On the sectoral front, the weekly action was mixed. Nifty Media (+4.8%) and Metal (+3.9%) were the leaders. On the flip side, Nifty Pvt Bank (-0.8%) and FMCG (-0.8%) were the major decliners. Nifty Midcap (+1.7%) and Smallcap (+2.0%) outperformed the major index.

The Indian market remains in a Confirmed Uptrend. We would like to see fresh names flexing their muscles for a sustainable rally. Finding favorable entries into powerful breakouts may be the best use for new money in the current market. However, things can change quickly due to high volatility. We are operating in an uncertain environment where information is distributed unevenly, wherein outside forces, either intentionally or unintentionally, affect prices across various time frames. We will continue to monitor the behavior of the market and keep an open mind as to how it unfolds.

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