At 8:00am IST, the SGX Nifty Futures was trading at 10,916, compared with Nifty’s close of 11,805 Thursday. Today, it is crucial for Nifty to hold its 200-DMA and stage a smart recovery from there.
Market status: Downtrend
Current Correction Low: 10,791
Global stock markets: Dow 30, +0.2%; S&P, +0.3%; Nasdaq, +0.4%; Nikkei, +0.7%; Hang Seng, +0.8%; KOSPI, +0.7%
Nifty gapped lower yesterday morning and remained under pressure in the first half. Selling pressure intensified in the second half, with Nifty breaching 10,800. Volume was slightly lower compared with the previous session, but higher than the 50-day average volume. Pain was evenly felt in broader indices too. Nifty Midcap breached its 50-DMA.
On Tuesday, we moved the market to a Downtrend as Nifty breached its 50-DMA. The distribution day count remained elevated at seven, and many leading stocks failed to hold logical support levels. Yesterday, Nifty closed just above its 200-DMA (10,767). On the sectoral front, barring Nifty FMCG (-0.9%), all the indices closed 3–4% lower. The advance-decline ratio was in favor of decliners. Of 2,203 stocks traded, 327 advanced, 1,509 declined, and the rest remained unchanged.
Under this market conjuncture, investors should remain on the sidelines and avoid taking any fresh exposure. Further, investors already with positions open should trim their market exposure, and raise cash if possible. They should wait for the market to show credible signs of recovery and in the meantime, look out for stocks that show resilience under falling market scenarios. Looking forward, we will shift the market to a Rally Attempt if Nifty establishes a bottom and stays above yesterday’s low (10,791) for three straight sessions. From there, we would prefer to see a follow-through day before shifting the market back to a Confirmed Uptrend. Should this occur, the focus will be on ideas that show the best relative strength with good accumulation.
Tata Consultancy Svs. has received a digital services order from the U.S. based fashion apparel retailer Maurices.
Oil & Natural Gas will soon resume operations at its Hazira plant. Yesterday, fire broke out at the Hazira gas processing plant after a series of three blasts but no casualties were reported.
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, 12%; Rally Attempt, 4%; Uptrend Under Pressure, 68%; Downtrend, 16%.
For the 24 developed markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 4%; Rally Attempt, 4%; Uptrend Under Pressure, 60%; Downtrend, 32%.
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