Market Pulse: Confirmed Uptrend

Distribution Day Count: Three

Today, Nifty opened a little weak, but gained more than 50 points from its opening low. However, it failed to hold the gains and made a low around 16,495. The market was a little on the backfoot like Team India’s situation at the end of day four at Lords against England. But like day five of the test match, when Team India bounced back and recorded a historic win, in the second half, Nifty recovered from the lows and made a new high. It closed in the top quartile of the day’s range. Volume was comparatively low. There was mixed action in the broader market.

On the sectoral front, Nifty IT (+2.6%) and FMCG (+1.4%) were the top gainers. On the flip side, Nifty Metal closed 2.3% lower. Nifty Bank, Financial Service, and Realty closed 0.3–0.6% lower. The advance-decline ratio continued to favor decliners. Of 1,986 stocks traded, 670 stocks advanced, 1,273 stocks declined, and the remaining closed flat.

Currently, the distribution day count stands at three. 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 showing 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 stock.

Key News

Hindustan Zinc (Nse)’s board meeting, scheduled for today, was deferred by the company. The stock declined more than 4%.

Caplin Point Labs.’s subsidiary, Caplin Steriles Ltd, has received approval from Brazil’s National Health Surveillance Agency for its sterile injectables manufacturing site near Chennai, Tamil Nadu.

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