Today’s Action:
Benchmark indices fell heavily for the second consecutive trading session, mainly weighed down by all the sectors.
Daily Market Review
After opening higher compared to the last day’s trading session, the Sensex lost over 400 points intraday, while the Nifty breached the 9,800 level. The broader indices followed the frontline indices, this heavy distribution in the market could be attributed to Korean tensions and the FIIs pulling out huge cash from the market.
Today, the Nifty opened lower at 9,960.10, after trading in the range of 9,816.05-9,960.50 and it ended the day with a loss of 0.92% at 9,872.60. The BSE Sensex opened at 31,986.40 points. After trading in the range of 31,474.56-32,016.52, the index finally settled at 31,626.63, shedding 295.81 points or 0.93% from Friday’s close.
The market breadth, indicating the overall health of the market, showed the nonperformers taking a lead over the gainers in today’s session. On the NSE, 248 stocks advanced, compared with 1245 stocks declining, and 32 stocks remaining unchanged.
The broader markets followed the frontline indices today as the Nifty Midcap and Smallcap indices fell 1.32% and 2.34%, respectively.
The MarketSmith India IND 47 Index, which lists the top 47 stocks in chart on fundamental characteristics, lost 1.84% today.
On the sectoral chart, all the sectors were tilted towards the losing side today with the Nifty Realty, Pharma, and Financial Service being the top nonperformers with declines of 3.13%, 1.78%, and 1.11%, respectively.
As per the government’s estimates, production of summer-sown rice is expected to fall 2% to 94.48M tons, while the production of pulses could drop 7.5% to 8.71M tons.
In stock news, Jaypee Group, gets shareholder’s approval at its annual general meeting held on September 23, to raise up to INR 2,000 crore through the sale of securities.
Thomas Cook India today announced that it will acquire Tata Capital’s wholly owned subsidiaries, Tata Capital Forex and TC Travel and Services. However, the value of the deal was not shared.
Capacit’e Infraprojects had a stellar listing with the gains of 59.6% on its debut at INR 399, however, as the day progressed the stock erased a large part of its gains as the investors resort to booking profits.
Today, the Nifty observed a lower trading volume, while the Sensex observed a higher trading volume compared to the previous trading session.
Due to lower trading volume, the Nifty escaped a distribution day today, thus keeping the total distribution day count at 3 for the Nifty, while the Sensex gained one distribution day and dropped another due to ageing, thus taking the total distribution day count to 4. Nifty is trading 3% below its all-time highs, while it has also breached its 50-DMA, therefore, we change the market status from “Confirmed Uptrend” to “Uptrend under pressure”.
So, what should be your action plan in the current market?
The benchmark indices witnessed a heavy distribution for the second consecutive day today. The Nifty has breached the key support level of 9,950 and is trading 3% below its all-time highs. The market status has been changed to Uptrend under pressure and investors need to exercise caution and any new positions should be restricted to high-quality stocks, which are fundamentally and strong.
While picking stocks that breaking out of their bases on heavy trading volume, make sure they have strong fundamentals. Such stocks would be the ones that meet CAN SLIM criteria such as accelerating sales and earnings growth and increasing institutional sponsorship. Your investments should be reserved for companies that have a strong business model along with a strong track record of top-line and bottom-line growth.
It is the time to strictly follow the sell rules, cut down losses at 7-8% from the buy points, while profits should be booked for those positions which have provided a return of 20-25%. In this volatile market removing the stock on technical weakness is a good way to preserve capital.
Leaders Up on Volume: {TVTODAY} (+15.37%), {NSE:SCI} (+11.88%), {VMART} (+0.73%)
Leaders Down on Volume: {L&TFH} (-4.84%), {TIDEWATER} (-3.88%), {MOTILALOFS} (-3.26%)
Current Outlook:
– Market environment conducive for new 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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