Daily Big Picture – Market Scores Hat-Trick of Gains

Today’s Action:

Benchmark indices extend winning streak to three sessions; broader market outperforms.

Daily Market Review:

The Indian stock market continued from where it left last week. Both frontline indices gathered strength as the day progressed.

In the end, the Nifty and the Sensex finished with impressive gains of 0.8% and 0.7%, respectively.

With crude oil prices softening a bit and the Indian rupee pulling back after hitting a 16-month low, market bulls kept bears at bay for the third straight session. The 10-year bond yield dropped 0.8% to 7.73% – the second consecutive session of decline. 

The strength was not just limited to large-cap stocks. In the broader market, the Nifty Midcap and Smallcap accumulated solid gains of 1.4% and 1.7%, respectively.

Gains were supported by a strong market breadth with gainers outnumbering losers in a ratio of 5:2.

Barring Nifty IT (-1.9%), all sectoral indices had a good outing. PSU Bank (+2.7%), Pharma (+2.4%) and Realty (+1.5%) topped the gainers list.

The MarketSmith India IND 47 index, our proprietary list of the top 47 stocks in chart and fundamental characteristics, gained 1.4% today.

Talking about market direction, the Indian market continues to be in an Uptrend Under Pressure. The distribution day count remains unchanged at four on the Nifty and two on the Sensex.

India’s frontline indices are now trading 3-4% below their all-time highs. However, broader market indices have corrected steeply and are down 13-18% from their record highs.

Despite a massive correction, the Nifty Smallcap managed to hold above its recent bottom and recorded a Follow-Through Day on May 25 (Friday).

Current Outlook:

– Be cautious with new purchases

– Form a defensive game plan for your portfolio

– Stay disciplined and exercise sound sell rules

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