Today’s Action:
Frontline indices face distribution; broader market remains weak.
Daily Market Review:
Bears cashed in on a global market rout to send India’s frontline indices lower today. The Nifty and the Sensex dropped 0.8% and 0.7%, respectively, on volumes greater than the previous session.
The global market sentiment took a hit after trade tensions between the U.S. and China escalated.
Selling pressure was intense in the broader market, as the Nifty Midcap and Smallcap plunged 1.2% and 1.5%, respectively.
The overall market breadth remained weak with losers outnumbering gainers in a ratio of 3:1.
On the sectoral front, weakness was seen across the board with all indices closing in a negative territory. The top losers were Nifty Realty (-2%), PSU Bank (-1.6%) and Metal (-1.6%).
Mirroring the sell-off in the broader market, the MarketSmith India IND 47 index, our proprietary list of leading stocks, declined 1.2%.
On the political front, the BJP took back its support from alliance with PDP government in Jammu & Kashmir. Political uncertainty that has grown bigger post Karnataka state elections continue to play a spoilsport in the Indian market.
The Indian rupee fell to a three-week low against the U.S. dollar today.
Talking about market direction, today’s session qualified as a distribution day on both the Sensex and the Nifty. The distribution day count now stands at four on the Sensex and three on the Nifty. Moreover, both the indices have come quite close to their 50-DMA and the gap has reduced to 0.5% for the Nifty and 0.9% for the Sensex. The market condition remains unchanged at an Uptrend Under Pressure.
While the broader market indices are yet to test their previous lows, both the Nifty Midcap and Smallcap have accumulated huge overhead resistance and are down 15% and 23% from their respective all-time highs.
Current Outlook:
– Be cautious with new purchases.
– Form a defensive game plan for your portfolio.
– Stay disciplined and exercise sound sell rules.
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