Nifty Adds a Distribution Day; Midcaps Underperform

Today’s Action

Nifty, -0.6%; Sensex, -0.5%; Nifty Midcap, -0.9%; Nifty Smallcap, -0.5%; Model Portfolio, -0.3%.

Market Pulse: Confirmed Uptrend

Distribution Day Count: Two

Nifty started the session on a flat note and quickly started to fall. After noon, it observed buying at the dip, but a sell-off in the last hour ensured Nifty ended near the day’s low. Today’s action qualified as a distribution day as the fall was more than 0.2% on volume higher than yesterday’s. It was a broad-based sell-off today as broader market indices Nifty Midcap (-0.9%) and Smallcap (-0.5%) also close in the red. Barring Nifty FMCG (+0.6%) and IT (+0.3%), all the sectoral indices closed lower. Nifty Media (-2.9%) and Realty (-1.3%) declined the most. The advance-decline ratio was in favor of decliners, as out of 2,263 stocks traded, 662 stocks advanced, 1,286 stocks declined, and the remaining closed flat.

Addition of distribution days is a sign of weakness in the market. However, the count remained at two as one distribution day expired today. If the index falls, adds a distribution day, and breaches its key moving averages, we may change the market status to an Uptrend Under Pressure. Focus on quality ideas emerging out of sound bases with RS line at or near new highs while reducing exposure to stocks breaking below key support levels.

Key News

Rites announced its Q4 FY21 results. Consolidated revenue increased 11.4% to Rs 636 crore. PAT declined 1.6% to Rs 141 crore. EBITDA margin expanded 50bps y/y to 29.1%.

Larsen & Toubro Infotech signed a definitive agreement to acquire Cuelogic Technologies, a Pune-based digital engineering company.

Alembic Pharmaceuticals’s joint venture Aleor Dermaceuticals received final approval from the U.S. FDA for its abbreviated new drug application for testosterone topical solution USP.

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