Daily Big Picture : Nifty Breaches 200-DMA, Moved to Downtrend; Reliance and HDFC Among Top Losers

Today’s Action

Nifty, -0.9%; Sensex, -0.8%; Model Portfolio, -0.4%; Nifty Midcap, -1.9%; Smallcap, -2.6%

Daily Market Review

Market Status: Downtrend 

Benchmark indices remained volatile through the day and Nifty closed below the key support at 11,144 (200-DMA). Stocks such as Indusind Bank (-6.6%), State Bank Of India (-4.7%), Reliance Industries (-2.5%), and Housing Development Fin. (-1.0%) were the biggest decliners on the index. With Nifty breaching its 200-DMA and elevated distribution day count of four, we moved the market to a Downtrend from an Uptrend Under Pressure. Nifty Midcap and Smallcap fell 1.9% and 2.6%, respectively.

Barring Nifty IT (+0.7%), all the sectors closed in the red. Gain on Nifty IT was led by Tata Consultancy Svs. (+2.3%), Hcl Technologies (+0.8%), and Infosys (+0.2%). Nifty PSU Bank (-4.9%) was the biggest decliner followed by Nifty Metal (-3.3%), Media (-2.3%), and Auto (-2.1%). The advance-decline ratio was skewed toward decliners. Out of 2,104 stocks traded on the NSE, 1,422 declined, 351 advanced, and the rest remained unchanged.

We recommend that investors trim positions, raising cash if possible, or keep a defensive approach by holding stocks that are resilient in falling market. Investors should consider booking profits in the stocks that have performed well and have advanced 20-25% from their ideal buy points. We will shift the market to a Rally Attempt if the Nifty establishes a bottom and stays above its recent low for three straight sessions. From there on, we would prefer to see a follow-through day before shifting the market back to a Confirmed Uptrend.

Key News

Axis Bank: The bank announced its earnings today. Profit rose 95% y/y to Rs 1,370 crore, missing estimates of Rs 1,897 crore. NII rose 13% y/y to Rs 5,844 crore. Asset quality remained stable sequentially with the bank’s gross NPA and net NPA coming at 5.25% and 2.04%, respectively. The stock fell 1.8% today.

Tech Mahindra: The stock fell 0.9% on weak Q1 FY20 results. Its net profit fell 15% y/y to Rs 959 crore and revenue was down 2.7% y/y to Rs 8,653 crore. Dollar revenue was down 1.6% y/y to $1,247.1M. EBIT was down 27% y/y and margin contracted 390bps to 11.5%.

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

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