U.S. Indices Decline Sharply, Dow Falls More Than 1,800 points; SGX Nifty Indicates Gap-Down Opening

June 12 2020

Market Preview

At 8:00 am IST, the SGX Nifty Futures was trading at 9642.3, compared with Nifty’s close of 9,902 yesterday.

Market status: Confirmed Uptrend

Global stock markets: Dow 30, -6.9%; S&P 500, -5.9%; Nasdaq, -5.3%; KOSPI, -2.2%; Nikkei, -1.3%; Hang Seng, -1%; Shanghai Composite, -0.6%.

Yesterday, Nifty saw a lower opening and went on to end the session on a negative note. Yesterday's session qualified as a distribution day as the fall was on volume was higher than that of the previous session. On the sectoral front, all the indices closed lower. Nifty PSU Bank (-3.9%) and Metal (-3.8%) were the major decliners. Remaining sectors declined more than 1.3%.

Global markets have come under high selling pressure. We will closely examine its effect on Indian markets. During trend disruptions like this, we pay close attention to leading stocks. It is the natural course for markets and stocks to trend and consolidate. These periods of consolidation are our chance to assess the landscape and see what stocks prove themselves.

The beauty of our CAN SLIM method is that we need not "expect," "hope," or "wish for" with respect to market action. We will take what the market gives us and continue to monitor unfolding conditions. We always look for stocks with strong relative strength. But investors should understand that it is not prudent to blindly buy stocks that have a high relative strength or simply because they have been performing well. This is the essence of momentum investing, and it can get you into trouble. Rather, one should base buying decisions on sound fundamental and technical analysis. Only invest in stocks that have strong fundamentals (i.e., good sales, earnings, and margins, among others) and that are breaking out of sound base structures on heavy volume.

Key News

Eicher Motors (Nse)Mahindra & Mahindra, and Hindalco Industries will report their Q4 results today.

Dixon Technologies (India) reported Q4 FY20 results. Net sales declined 0.2% y/y to Rs 857 crore, while profit was up 66.8% y/y to Rs 28 crore. EBITDA was up 49% y/y to Rs 56 crore.

Knr Constructions reported Q4 FY20 results. Revenue stood at Rs 730.14 crore as against Rs 765.35 crore for the same period year ago, while profit was down 22.1% y/y to Rs 84.82 crore.

O’Neil Market Condition Report

For the 24 emerging markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 96%; Rally Attempt, 0%; Uptrend Under Pressure, 4%; Downtrend, 0%.

For the 24 developed markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 71%; Rally Attempt, 0%; Uptrend Under Pressure, 29%; Downtrend, 0%.

Stock Watchlist

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