Nifty, -5.7%; Sensex, -5.9%; Nifty Midcap, -4.4%; Nifty Smallcap, -3.2%; Model Portfolio, +0.7%
Market Pulse Confirmed Uptrend
Weakness in the general market persisted throughout the session. Nifty staged a downside reversal and broke below its 50-DMA (9,778). However, we will not consider today’s move as a distribution day as volume was low compared to Friday’s session. Last week, there were two additional follow-through days. Today, Nifty undercuts low of both the additional follow-through days indicating technical deterioration.
Today, weakness was concentrated in Nifty Bank, Auto, Financial Services, and Metals. All these indices closed with a loss of 7–8%. On the flip side, Nifty Pharma closed in the green as eight out of 10 stocks in the index advanced. Of 2,135 stocks traded, 424 advanced, 1,399 declined, and the remaining traded flat.
Currently, picking up the stock from a sector as a whole in positive momentum becomes important. Group rank feature can be very helpful. Look for stocks that are among the top 40 groups and show improvement in rank. It has been observed that what is breaking out of a proper base and among top group rank is working well. It is also important that investors don’t play all their cards at once. In our portfolio, we are skewed toward Pharma and Chemical stocks. In the last few days, we had a decent amount of quality leaders in these sectors trading through justifiable entry points.
We would suggest adopting an investment approach where you begin with a small allocation and increase it as and when the market advances further. Without trying to predict and decode stories, we will take what the market gives us and continue to monitor unfolding conditions.
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Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.