Market Pulse: Confirmed Uptrend
Distribution Day Count: Nifty50 - Four Nifty Midcap100 - Five Nifty Smallcap100 - Six
Global stock markets: Dow 30, +0.6%; Nasdaq, +1.6%; S&P 500, +0.9%; Nikkei, +1.0%; Kospi, +1.5%; Shanghai Composite, +0.8%.
Nifty gapped up about 150 points on open yesterday, taking cues from global markets. However, after a strong start, it failed to hold gains and hit the day’s low of 16,396 in the first two hours of the session. Later, the index posted a minor recovery, closing 0.3% higher. Volume was lower than in the previous session. Broader markets witnessed profit booking and fell sharply. Midcap declined 0.9%, while Smallcap was down 1.9%.
On the sectoral front, Nifty IT (+1.7%), Nifty Financial Services (+0.4%), and Nifty Bank (+0.3%) closed in the green. On the flip side, Nifty Auto, Media, and Realty were down 1.0–1.7%. The advance-decline ratio continued to favor decliners. Of 2,004 stocks traded, 287 stocks advanced, 1,215 stocks declined, and the remaining closed flat.
The distribution day count currently stands at four. Nifty is trading near its all-time high. If the index adds a couple of distribution days, stages a reversal, or breaches its key moving averages, we may change the market status to an Uptrend Under Pressure. Reducing exposure to stocks breaking below their 21- or 50-DMA on higher volume is important. Over the last few sessions, the broader market seems to have fallen out of favor. Some stocks are displaying poor price behavior, resulting in minor damage to their charts. Shakeouts happen and are a normal course for growth stocks. But we do not want weak action to persist. We recommend being selective when investing in new stocks.
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