Daily Big Picture : Nifty Finds Support at 100-DMA, Adds a Distribution Day

Today’s Action

Nifty, -0.3%; Sensex, -0.4%; Nifty Midcap, -1.5%; Nifty Smallcap, -1.7%; and Model Portfolio, -0.9%.

Daily Market Review

Market Status: Confirmed Uptrend

Nifty rebounded after a brief breach of its 100-DMA. Today’s action qualifies as a distribution day and is the first one in the current Confirmed Uptrend. A distribution day occurs when an index (Nifty in our case) falls 0.2% or more on volume higher than the previous session. We need to monitor distribution day count in the coming few weeks. If the count increases, we might need to cautiously tread in these markets looking at price patterns and volume parameters to determine the strength and direction of stocks/sectors.

Barring Nifty IT (+1.9%) and FMCG (+0.3%), all other sectoral indices closed negative. Nifty PSU Bank (-3.5%) and Pvt Bank (-2.7%) were the top decliners. Three out of five Nifty50 top decliners are banks: Yes Bank (-13.2%), Indusind Bank (-6.9%), and SBI (-3.0%).

Though the market is in a Confirmed Uptrend, it has not fared well. Going forward, we will be looking for additional follow-through day to enhance our confidence in the market. Under the current scenario, investors should cautiously invest in quality stocks with strong fundamentals and follow pyramiding strategy in augmenting their risk exposure to the market.

The advance-decline ratio was leaned toward decliners. Of the 2,139 stocks traded on the NSE, 499 advanced, 1,311 declined, and the rest remained unchanged.

Key events to watch for during the week:

1. India’s infrastructure output for August and fiscal deficit for April-August will be released today after market

2. Manufacturing PMI will be released tomorrow

3. RBI bi-monthly MPC outcome on Friday

4. Auto sales for September will be released starting from tomorrow

Key News