Daily Big Picture – Lack of Positive Cues Drag Key Indices Down

Today’s action:

The major stock indices declined further today, widening the gap from their all-time highs. The Nifty Midcap index and Smallcap indices recover sharply.

Current Outlook:

●      Market environment conducive for new purchases, but remain selective.

●      Focus on fundamentally strong stocks breaking out of sound base patterns.

●      Stay disciplined and exercise sound buy and sell rules.

The benchmark indices continued to decline for a third straight day, despite starting the session in green. After starting at the day’s high, both the indices could not hold on to the gains and finally trended down to close at the day’s low.

By the close of markets, the Nifty lost 0.18% (-16.85 points) and closed at 9,181.45. The index traded in the range of 9,174.85-9,225.65.

The Sensex fared poorly compared to the Nifty, falling 0.44% (-130.87 points) and closing at 29,575.74. The day’s range was observed at 29,553.04-29,831.32.

The trading volume on the frontline indices remained meagre in comparison to the previous session. The Sensex avoided recording a second straight distribution day, thanks to lower volumes compared to the previous session.

However, the broader markets started the week with significant gains. Today, the Nifty Midcap and Smallcap indices recovered most of Friday’s losses by gaining 0.43% and 0.76%, respectively.

In contrast to the benchmark indices, the William O’Neil IND 47 Index, which lists the top 47 stocks in chart and fundamental characteristics, was up 0.43% today.

In the sector talk, the IT and Realty shares dragged the market performance as Nifty IT and Realty indices lost 1.41% and 0.56%, respectively. Most of the other sectoral indices managed to end positive, led by Nifty Media, Metal and PSU Bank.

Shares of liquor companies came under heavy selling pressure after Madhya Pradesh Chief Minister, Shivraj Singh Chouhan, announced that the government will initiate a phase-wise shut down of all liquor shops in the state.

Geopolitical events from around the world over the last week disrupted the rally of Indian markets, which was similar in other Asian equity markets as well. The missile attack by the U.S. on Syrian airfield and the unrest between North Korea and the U.S. made investors cautious.

With the advent of Q4 FY 2017 earnings season, market direction will largely depend on the how companies fared in the last quarter. Key indices retreated from their all-time highs as they came under selling pressure due to uncertain global cues. If the indices add any further distribution days to their existing distribution day count of 4.0, the current market status of a Confirmed Uptrend will be under threat.

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