Daily Big Picture – Weak Global Cues Drag Nifty Below 50-DMA

Today’s Action:

Key indices record sharp losses; broader market underperforms.

Daily Market Review:

Amid weakness in the global cues, frontline indices started the second half of 2018 on a subdued note.

The benchmark indices began the trading session on a positive note, but changed its trend early and dived lower. However,  buying seen in the late hours limited the losses to 0.5% each in the benchmark indices.

The 50-pack Nifty breached its 50-DMA support again whereas the Sensex is 0.3% above its 50-day line.

Volumes were higher on the Nifty compared to yesterday’s session, resulting in a distribution day. However, the Sensex escaped adding it as volumes were marginally lower.

In terms of the broader market, the selling pressure was intense as the Nifty Midcap and Smallcap dropped 0.7% each.

Decliners had an upper hand over gainers in an 11-6 margin on the NSE.

Barring few, most sector indices were in negative territory. Metal and Realty stocks were the most affected, losing 1.8% and 1.4%, respectively.

MarketSmith India IND 47 index, our proprietary list of top 47 stocks in chart and fundamental characteristics, declined 0.2%.

Talking about market direction, the distribution day count inched higher to five on both the benchmark indices. For the Nifty, the previous high of 10,929.20 serves as a crucial resistance zone. With the index falling below its 50-day line, the next level of strong support is around 10,550. The market condition remains unchanged at an Uptrend Under Pressure.

While both the key indices are only 3-4% away from their all-time highs, the Nifty Midcap and Smallcap are trading 17% and 26% from their 52-week highs, respectively. Both the index is now in a Downtrend as they are trading near to their previous lows.

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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