Current Market Status
The Indian market bid farewell to Diwali week on a positive note. Barring Nifty FMCG (-0.37%) and Metals (-0.21%), all the indices ended in the green this week. Top gainers for this week are Nifty Realty (+2.15%), IT (+1.09%), and Auto (+1.06%). According to MarketSmith India’s methodology, at the end of the week, Nifty Reality, Bank, Financial Services, Energy, and Auto are in a Confirmed Uptrend, whereas Pharma, IT, Metal, and FMCG are in a Rally Attempt. During the week, the Nifty and the Sensex were up 0.31% and 0.42%, respectively. Broader indices continued their winning streak as the Nifty Midcap and Smallcap rose 1% and 1.32%, respectively, both the indices are in Confirmed Uptrend currently. The YTD returns in the Nifty and the Sensex are 0.52% and 3.23%, respectively. Gains on the Nifty were driven by Yes Bank (+11.70%) and Tata Motors (+8.9%).
Looking ahead, What’s in store?
Last week, we changed the market status to a Confirmed Uptrend, since then we have seen some strong actions in leading stocks like Tata Motors, Maruti Suzuki, and Yes Bank. Ideally, after a follow-through day, we would like the Nifty to retake its key moving averages. Currently, the Nifty is ~1.65% below its 200-DMA and we will get a strong conviction about the current rally once it crosses that level. Today, it broke the 10,600 mark and the next key support level to watch out for is 10,490.
What can investors do?
The earnings season has been a mixed one with some companies being badly impacted due to rising raw material costs. Sudden rise in global markets, stable crude and currency price movement is helping the Indian market to march toward its key support levels. As the market is in a Confirmed Uptrend, investors are advised to look for fundamentally strong stocks trading constructively above their 50- and 200-DMA, and are about to break out on higher volume, to add to their portfolios. Some of the good quality stocks are Aarti Industries, ICICI Lombard, Vinati Organics, Divis labs, and PVR. On the contrary, the stocks that have undercut their key support levels such as 50- and 200-DMA on heavy volume should be sold as it indicates a technical weakness.
What do you think? Please email us any questions or comments.