Daily Big Picture – Volatility Plagues Market; Moody’s Cuts GDP Forecast

Today’s Action:

Weak global cues drag frontline indices; broader market follows suit.

Daily Market Review:

Benchmark indices extended losses for the second straight session as weakness in the global market dented investor sentiment.

The selling pressure mounted on the global stocks due to political turmoil in Italy.

Mirroring weak global cues, major indices gapped down and remained in a negative territory for the most part of session. 

As both key indices tried to recover, investors switched their attention from political uncertainty in Italy to India’s growth outlook by Moody’s.

Moody’s expressed concerns over the government’s tight fiscal condition due to high crude oil price. As a result, the rating agency cut India’s 2018 GDP growth forecast to 7.3% from 7.5%. The growth expectation for 2019 remains unchanged at 7.5%.

Amid high volatility ahead of tomorrow’s expiry, the Sensex and the Nifty posted small losses of 0.12% and 0.18%, respectively. While trading volumes were higher on both indices, the decline was not sufficient to qualify for a distribution day.

In the broader market, the Nifty Midcap and Smallcap dropped 0.1% and 0.3%, respectively.

Market breadth was negative as losers outnumbered gainers with a 9-7 margin on NSE.

On the sectoral front, pharma stocks took a beating as the index gave away 1%. Nifty Auto (-0.2%) and FMCG (-0.2%) had a dull session. On the flipside, Nifty PSU Bank (+0.6%) and Bank (+0.3%) posted modest gains.

The MarketSmith India IND 47 index, our proprietary list of the top 47 stocks in chart and fundamental characteristics, closed flat today.

Talking about market direction, the Indian market continues to be in an Uptrend Under Pressure. The distribution day count remains unchanged at four on the Nifty and two on the Sensex.

We continue to see a divergence in the broader market. Nifty Smallcap had recorded a follow-through day on May 25 (Friday) and is currently in a Confirmed Uptrend. Nifty Midcap managed to hold above its May 24 low for three straight sessions and is currently in a Rally Attempt.

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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