Today’s Action
Nifty extends losses for second straight session; escapes distribution day.
Daily Market Review
Benchmark indices extended losses for the second straight session, as investors remained cautious due to political uncertainty.
Mirroring weakness in the U.S. stocks, India’s major indices slipped right from the start. The selling pressure mounted on Wall Street as interest rates climbed higher. The yield on the 10-year Treasury note went up to 3.09%, the highest level in seven years.
Amid rising crude oil prices, India’s trade deficit marginally widened to $13.7 billion in April as compared to $13.24 billion a year ago.
Meanwhile, Indian rupee gained some momentum and rebounded 24 paise to 67.83 on Wednesday after falling to a 16-month low of 68.07 yesterday.
In the end, Nifty and Sensex fell 0.6% and 0.4%, breaching their psychological levels of 10,800 and 35,000. Volume declined on both exchanges. Hence, today’s action did not qualify as a distribution day.
Broader market fared better as compared to their frontline counterparts. While Nifty Midcap lost 0.07%, the Smallcap index gained 0.2%.
Talking about sectoral performance, Nifty PSU Bank (-3%) continued to face selling pressure along with Bank (-1.1%) and Financial Services (-1%) indices. However, Nifty Realty (+2%) and FMCG (+1.8%) found favour with investors.
Market breadth was once again dominated by losers. Out of 2,049 stocks traded on NSE, only 632 stocks advanced, while 1,078 declined and 339 remained unchanged.
Our proprietary list of leading stocks, the MarketSmith India IND 47 index lost 0.4% today.
Coming to market direction, the distribution day count, a measure that keeps track on recent institutional selling, sits at a comfortable level of two on Nifty and one on Sensex. Both the frontline indices are still trading well-above their key support of 50- and 200-day lines. So, the market condition remains unchanged at a Confirmed Uptrend.
That being said, the midcap and smallcap benchmarks have seen rising distribution in recent times and both the indices are still trading below their 50-day lines.
Current Outlook
– Market showing signs of divergence; key indices in uptrend while midcap and smallcap indices turn weak.
– Keep buying decisions restricted to stocks with exceptional fundamentals and technical strength.
– Stay disciplined and exercise sound sell rules.
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