Daily Big Picture : Nifty Adds Distribution Day; Colgate’s Q1 FY20 Margins Beat Estimates

Today’s Action

Nifty, -0.8%; Sensex, -0.8%; Model Portfolio, -0.6%; Nifty Midcap, -1.7%; Smallcap, -1.1%

Daily Market Review

Market Status: Uptrend Under Pressure 

Nifty, after facing resistance near its 50-DMA in yesterday’s session, opened on a weaker note and continued to trade lower. Today’s session qualifies as a distribution day, taking the count to four. The broader market was under selling pressure as Nifty Midcap and Smallcap were down 1.7% and 1.1%, respectively. The advance-decline ratio (0.7-0.8) is leaned toward decliners for the last three months. Increasing distribution and shrinking market breadth are the signals indicating weakness in the market.

Nifty Financial Services (+0.1%) and Media (+0.2%) were the only sectors that closed in the green. Nifty Auto (-2.8%), PSU Bank (-3.2%), and Metal (-2.5%) declined the most. Of the total 2,095 stocks traded on the NSE, 453 advanced, 1301 declined, and the rest ended flat.

Looking forward, to have a constructive view, we would like to see Nifty retake its 50-DMA with healthy market breadth. On the downside, 100-DMA (11,560) could be a key support. We may change the market status to a Downtrend if the Nifty breaches key support and adds two-three distribution days.

Key News

Colgate-Palmolive India: For Q1 FY20, revenue and PAT were in line with consensus, while EBITDA margin beat consensus. The Company’s net profit increased 5% y/y (after adjusting exceptional item gains in Q1 FY19). EBITDA margin expanded 60bps y/y to 27.6%. Management commented that growth in rural markets was lower than expected. The stock was up 3.2% and retook its 200-DMA.

D B Corp: The Company reported Q1 FY20 revenue at Rs 607.03 crore, down 4% y/y. PAT at Rs. 93.73 crore was down 3.9% y/y, while EBITDA grew 2.7% y/y to Rs 180 crore. The stock reacted positively (up 3%) but is trading below all its key moving averages and looks weak on O’Neil parameters.

What do you think? Please email us any questions or comments.

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