Weekly Big Picture – Benchmark Indices Extend Gains; Sensex Picks up Two Distribution Days

MarketSmith India _ Weekly Big Picture.MARKET PULSE

Status: Confirmed Uptrend

Highlights:

Three up days, two down days

Weekly Market Review

The benchmark indices managed to move higher after the gains made during the last week. Both, the Sensex and the Nifty started on a positive note on Monday after rallying over 0.60% each. On Tuesday, even as both the headline indices advanced higher, the Sensex’s gain was muted, at 0.19% compared with 0.37% for the Nifty. Both the indices registered their respective all-time closing highs on Tuesday. The Sensex picked up distribution days on Wednesday and Thursday, while the Nifty added one to its tally yesterday. The indices closed for the week with modest gains in today’s session.

The Nifty started the week at 10,077.10 and traded in the narrow range of 9,988.35-10,137.85. The index finally closed at 10,066.40, up 0.52% from last Friday’s close.

After opening at 32,412.20 points, the Sensex added 0.05% in this week to close at 32,325.41. During the week, the Sensex traded in a range of 32,107.99-32,641.58.

The current distribution day count for the Nifty stands at 2.0, while for the Sensex, it stands at 4.0. Both the indices observed a lower trading volume today compared to the previous trading session. The market condition remains in a Confirmed Uptrend.

The broader markets underperformed the frontline indices this week, the Nifty Midcap and Smallcap indices lost 0.56% and 1.72%, respectively.

The MarketSmith IND 47 Index, which lists the top 47 stocks in chart and fundamental characteristics, gained 0.06%, this week.

The sectoral chart was tilted towards the green quadrant as the majority of the sectoral indices closed positive by the end of this week’s trading. The top three gainers in this week were Nifty Energy, Metal, and Auto with gains of 4.20%, 2.96%, and 1.85%, respectively. The Nifty Pharma, FMCG, and Media sectors recorded losses of 4.30%, 1.85%, and 0.48%, respectively.

In Stock talk, State Bank Of India made a big move by introducing a 2-tier savings bank interest rate structure. It has announced a cut in the savings bank interest rate from 4% to 3.5% on account balances lower than INR 1 crore. Balances above INR 1 crore will continue to earn 4% interest.

The RBI announced its bi-monthly monetary policy decision on Wednesday; the Monetary Policy Committee cut the repo rate by 25 basis points to 6%, in view of declining inflation and slowdown of economic activities. The apex bank has also slashed the reverse repo rate, the rate at which it borrows from commercial banks by 25 basis points to 5.75%.

In the PMI data released on Thursday, Nikkei India Services PMI Business Activity Index plunged to a four-year low of 45.9 in July 2017 as compared to 53.1 in June 2017. This hints at the deteriorating business activity in the services sector following the GST launch.

Mahindra & Mahindra announced its Q1 FY 2018 results today. The Company’s profit fell 20% to INR 768 crore, impacted by GST and high base.

Today Biocon fell more than 9% intraday as the company received 10 observations from the U.S. FDA for its Bengaluru unit.

The following event could serve as market movers in the coming week:

– Release of Industrial and manufacturing production data on August 11.

Current Outlook:

– Market environment conducive for new purchases, but remain selective.

– Focus on fundamentally strong stocks breaking out of strong technical patterns.

– Stay disciplined and exercise sound buy and sell rules.

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