Today’s Action:
Market continues to keep investors guessing about its trend.
Daily Market Review:
Today, we observed a very gruelling session for the midcap (-1.84%) and smallcap (-2.48%) indices as both witnessed heavy sell off as they were trading in overbought zone. The Nifty and the Sensex lost 0.38% and 0.21% respectively. The market seems to perceive that the broader indices are fundamentally too expensive, and therefore a mild correction cannot be denied. However, a small correction like this is a health signal for a long bull run.
The put/call ratio, a sentiment indicator, is nearing its high since 2010 and is a cause of wary as the investors feel that the market is trading in a high-priced zone and a reversal is possible. So this calls for some caution and we should be strictly following the buy and sell rules. Today both the Sensex and the Nifty added one distribution day each.
Apart from Nifty IT (+3.65%), all the sectors witnessed heavy distribution today, the top sectors to lose were Nifty Realty (-3.38%), Metal (-2.84%) and PSU Bank (-2.81%).
The trade deficit widens to $14.88B and has hit 3-year high, which could be one of the reasons for the temporary jitter on the Dalal street.The appreciation of Rupee and the GST has crippled the export. Owing to implementation of GST, exporters are facing hurdles in taking the input tax credit. At the same time, sectors such as engineering goods, organic and inorganic chemicals, pharma have benefitted from the implementation of GST and observed more than 20% growth in exports.
Increasing bond yields and weakening rupee were the reasons for the markets to fall as people receive higher incentives to invest in less risky bond funds compared with equities as investors feel that market’s valuation is high.
The market breadth, which indicates the overall health of the market continues to be in favor of losers. Today on the NSE, 1317 stocks declined and 244 stocks advanced. A total of 25 stocks remain unchanged.
Our proprietary list MarketSmith India IND 47 declined 3.04% today.
Today, both the Sensex and the Nifty added one distribution, thus the count for the Sensex and the Nifty increases to one and three, respectively while the Indian market remains at a Confirmed Uptrend.
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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