At 8:00am IST, the SGX Nifty Futures was trading at 11,887, compared with Nifty’s yesterday close of 11,935.
Market status: Rally Attempt
Global stock markets: Dow 30, -0.6%; S&P, -0.6%; Nasdaq, -0.04%; Nikkei, +0.1%; Hang Seng, -0.2%
Yesterday, Nifty opened on a flat note, quickly lost over 40 points, and made an intraday low of 11,888 within the first 10 minutes. Buying was seen at the lower levels among IT stocks, and Nifty gained 100 points to make an intraday high of 11,988. Volume was lower than the previous session. In the broader market, both Nifty Midcap and Smallcap showed underperformance and declined 0.5% and 0.2%, respectively.
On the sectoral front, barring Nifty IT (+1.4%) and Metal (+0.3%), all the sectoral indices closed in the red. Nifty Pharma (-1.9%) declined the most, followed by Nifty Media (-1.7%) and PSU Bank (-1.6%).
Looking forward, we would prefer to see a follow-through day before shifting the market to a Confirmed Uptrend. (A follow-through day is a solid up session, generally a 1.5% or higher gain, with volume being higher than the previous day). Should this occur, the focus will be on ideas that show the best relative strength with good accumulation. Stocks that recover the quickest tend to lead the next run. On the flip side, if Nifty breaches its recent low of 10,790, the market will be moved back to a Downtrend.
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, 15%; Rally Attempt, 10%; Uptrend Under Pressure, 50%; Downtrend, 25%.
For the 24 developed markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 20%; Rally Attempt, 5%; Uptrend Under Pressure, 65%; Downtrend, 10%.
Model Portfolio Stock Earnings Preview
Our portfolio stock Infosys will report its Q2 FY21 results today. According to consensus, Infosys may report a 10% y/y growth in adjusted net profit for Q2 FY21. Revenue may increase 6% y/y. Consensus expects Infosys to raise FY21 revenue growth guidance to 1—3% from 0—2% provided during the last quarter as there were large deal wins including Vanguard during Q2 FY21. The stock is extended from the ideal buy range and is up 17% in our portfolio in less than a month.