Daily Big Picture – Nifty Trades Flat On Selective Buying

DailyBigPicture-MarketSmithIndia-WilliamOneilIndia

Today’s Action:

Markets observed some relief as the poor morning trading session was offset by better trade in the afternoon.

Daily Market Review

Equity indices displayed some recovery amidst volatility due to the Korean peninsula tensions and ahead of the expiry of September derivatives contracts. After declining heavily in the morning trading session, the markets observed some short recovery during the afternoon trade as the Nifty ended flat today. Midcap and Smallcap indices extended their morning gains.

Today, the Nifty opened marginally higher at 9,875.25 after trading in the range of 9,813.35-9,891.35 and ended the day flat at 9,871.50. The BSE Sensex started the day at 31,685.81 points and traded in the range of 31,455.65-31,693.59 the index finally settled at 31,599.76 with a marginal loss of 0.08%.

The market breadth, indicating the overall health of the market was in favour of the gainers today. On the NSE, 950 stocks advanced, compared with 502 stocks declining, and 58 stocks remaining unchanged.

The broader markets displayed a divergence in their performance compared to the frontline indices as the Nifty Midcap and Smallcap both gained 0.60% and 0.74%, respectively.

The MarketSmith India IND 47 Index, which lists the top 47 stocks in chart on fundamental characteristics, gained 0.85% today.

The sectoral chart was tilted towards the gainers today. The top three gainers were Nifty Realty, Metal, and PVT Bank gaining 2.69%, 2.40%, and 0.31%, respectively, while among the four nonperformers the top three were Nifty FMCG, Media, and IT with declines of 0.43%, 0.34%, and 0.19%, respectively.

Vista Pharmaceuticals share price rallied 5% intraday after the recent news stated that the Company has submitted an abbreviated new drug application (ANDA) to the U.S. health regulator.

JBM group has signed an order worth INR 176 crore from the Haryana government. The Company will develop a waste management plant.

Both the Nifty and the Sensex observed a lower trading volume today compared to yesterday. Due to ageing the Sensex dropped a distribution day today, thus the total distribution day count for both the indices remains at 3, while the market status remains at “Uptrend under pressure”.

So, what should be your action plan in the current market?

Benchmark Indices are trading 3% below its all-time highs, today we observed some recovery in the market, but that was short lived as during the last hour of the trade the markets again fell to end flat. The market status remains at the Uptrend under pressure, which means any new positions in the stock should be avoided.

It is very important to follow an investment discipline like CAN SLIM during such a volatile market. Wait for the stocks to break out of their sound base patterns on strong volumes before buying. Further, pick only those stocks which are fundamentally and technically strong, such stocks would be the ones that meet CAN SLIM criteria such as accelerating sales and earnings growth.

While picking stocks that are breaking out of their bases on heavy trading volume, make sure they have strong fundamentals. Such stocks would be the ones that meet CAN SLIM criteria such as accelerating sales and earnings growth and increasing institutional sponsorship. Your investments should be reserved for companies that have a strong business model along with a strong track record of top-line and bottom-line growth.

It is time to strictly follow the sell rules, cut down losses at 7-8% from the buy points. Profits should be booked for positions which have given a return of 20-25%. In this volatile market removing the stock on technical weakness is a good way to preserve the capital.

Leaders Up on Volume: {CAPLIPOINT} (+7.03%), {DHFL} (+6.07%), {TEAMLEASE} (+3.59%)

Leaders Down on Volume: {HINDPETRO} (-2.27%), {VMART} (-0.21%), {ASIANTILES} (-0.32%)

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.

To Read Detailed Reports including Stock Recommendations, Idea Lists, Evaluate Stocks etc. Subscribe to  MarketSmith India.

Leave a Reply

Your email address will not be published. Required fields are marked *