Weekly Big Picture : Nifty records the Highest Loss of the Decade. Here are some stock market tips to help you through it.

Weekly Action

Nifty, -7.3%; Sensex, -6.9%; Nifty Midcap, -7.2%; Nifty Smallcap, -7.7%; and Model Portfolio, -6.2%.

Market Pulse Downtrend

Weekly Market Review

Nifty declined 7.3% during the week due to fears of widespread coronavirus. This is the highest weekly decline since the 2008-09 global financial crisis. Currently, it is trading below its major key moving averages, 200-DMA (-3.9%), 100-DMA (-6.2%), and 50-DMA (-7.3%). Nifty Midcap (-7.2%) and Smallcap (-7.7%) indices also showed weakness. India VIX surged around 30% today.

All the sectoral indices declined during the week. Nifty Metal (-14.5%), Auto (-10.3%), Media (-10.6%), and PSU Bank (-10.2%) declined over 10%. Remaining indices declined over 5% with FMCG (-4.3%) declining the least. Due to heavy declines, all the sectoral indices breached their 50-DMA. Barring Financial Services and Realty, all the sectors are trading below their 200-DMA.

We have downgraded the market to a Downtrend, implying minimizing exposure toward the market. We recommend investors to trim positions, raising cash if possible, or keeping a defensive approach by holding stocks that are resilient in a falling market. Investors should consider booking profits in stocks that have performed well and have advanced 20-25% from their ideal buy points. Even if the market undergoes a small correction, these stocks are likely to fall more. Further, stocks slipping below their respective 50- and 200-DMA on above average volume should be sold. Consider exiting stocks that have declined 8% from your buy price.

Looking forward, we will shift the market to a Rally Attempt if Nifty establishes a bottom and stays above its recent low for three straight sessions. From there, we would prefer to see a follow-through day before shifting the market back to a Confirmed Uptrend. Should this occur, the focus will be on ideas that show the best relative strength with good accumulation. The stocks that recover swiftly tend to lead the next run. Investors should maintain a watch list of attractive growth stocks and wait for the market to show signs of a Rally Attempt.

Key News

Continue reading with a MarketSmith India Premium subscription…

To Read Detailed Reports including Stock Recommendations, Idea Lists, Evaluate Stocks etc. Subscribe to MarketSmith India

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.

Performance computations reflect a -weighted rate of return and includes a brokerage of 0.5%. All holdings are rebalanced to equal rupee amounts daily. Dividends are not considered in computations. Percent gains and losses are calculated for all issues that remain on the “Current Holdings” at the end of the day. For stocks that were added to “Current Holdings”, the basis used to calculate the percent change is the price noted when the issue appeared as a “Current Holdings” in MarketSmith India. For stocks that were removed, the selling price used to calculate the percent is the price note d when the issue appeared as “Removed” in the MarketSmith India. For more information, see our Legal disclosures here.

Leave a Reply

Your email address will not be published. Required fields are marked *