Daily Big Picture – Caution Sets In Ahead of US-China Trade Talks

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 turn cautious ahead of U.S.-China trade talks.

Major indices slipped right from the start, mirroring weakness in the U.S. stocks. The selling pressure mounted on Wall Street after the Federal Reserve kept interest rates unchanged and indicated higher inflation ahead.  

As both key indices tried to recoup from its losses, investors switched their attention from the Fed to the outlook of global trade war. Today observes the start of the trade talks between U.S. and China. The expectation of any agreement is minimal.

However, in the end, Nifty fell 0.4%, yet breaching its 10,700 level and trimming earlier losses of 0.7%.

The 30-pack Sensex ended with a 0.2% decline, but cut back earlier loss of 0.5%. Volume declined on both exchanges, hence escaped distribution day.

In all this hustle and bustle, the broader market got impacted, as the Nifty Midcap and Smallcap plunged 1% and 0.9%, respectively.

In terms of sectoral indices, Nifty IT (-2%) continue to face another round of profit booking along with Nifty Realty (-1.7%) and FMCG (-1.2%). But, Nifty Metal (+0.8%) and Private Bank (+0.2%) had a decent outing.

With regards to market breadth, losers had an upper hand. Of the 1,623 stocks traded on the NSE, 1,211 declined, 356 advanced, and 56 remained unchanged.

Dragged by midcap and smallcap stocks, our proprietary list of leading stocks, the MarketSmith India IND 47 index lost 0.6% in today’s trade.

The distribution count, which measures heavy-volume selling in recent times, remains same at one for Nifty while zero for Sensex. Since the market has recouped a lot from February’s losses, profit booking sessions cannot be ruled out. Both indices are still trading comfortably above their key support levels of 50- and 200-DMA. Hence, the market remains in a Confirmed Uptrend.

Current Outlook:

– Market environment conducive for purchases, but remain selective.

– Focus on fundamentally strong stocks breaking out of strong technical patterns.

– Stay disciplined and exercise sound buy and sell rules.

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