Weekly Big Picture – Friday’s Rally Propels Key Indices Above 50-DMA

Market Pulse:

Uptrend Under Pressure


Two up and three down days

Weekly Market Review:

India’s benchmark indices snapped their five-week winning streak amid high volatility.

Rising trade war tensions, higher crude oil prices, and depreciation of Indian rupee were the major concerns that made investors cautious.

The expiry week began on a muted note in the midst of rising trade tensions between the U.S. and China. In the end, the Nifty and the Sensex logged a loss of 0.6% each in Monday’ssession.

Both the Nifty and Sensex displayed stalling action on Tuesday, giving away most of early-session gains to close marginally higher.

Ahead of the expiry, the selling pressure remained strong on Wednesday. As the crude oil price peaked out to $76.67 per barrel, the Nifty breached its crucial support of 50-DMA.

Yesterday, the Indian rupee fell to an all-time low of 69 per U.S. dollar. As a result, the Nifty fell to its lowest level in four weeks while the Sensex breached its 50-DMA.

However, in all this hustle and bustle, the Indian market took a U-turn on Friday, halting the two-day decline. Amid recovery in the rupee, the Nifty and the Sensex reclaimed their previous support of 50-day line.

Eventually, the Sensex and the Nifty ended the week with losses of 0.8% and 1%, respectively.

In the broader market, the Nifty Midcap and Smallcap paid a heavy price once again with the indices tumbling 2.2% and 3.4%, respectively.

Talking about sectoral performance, Nifty IT (+1.5%) and FMCG (+1.2) had a decent week. On the flip side, Nifty PSU Bank (-5.3%), Energy (-4.4%) and Media (-3.9%) took a worst hit.

MarketSmith India’s IND 47 index, our proprietary list of top 47 stocks in chart and fundamental characteristics, lost 3.8%.

During the week, the Nifty added two distribution days and lost one, whereas the Sensex added one, taking the distribution day count to four on the Nifty and five on the Sensex.

With the distribution count inching higher and the market continuing to trade in a broad range, the market condition remains unchanged at an Uptrend Under Pressure. For the market to move to a Confirmed Uptrend, the Nifty needs to reclaim its previous high of 10,929.20. On the downside, 10,550 and 10,400 are crucial support levels for the index.

In the coming week, the following events could serve as market movers:

  • Monthly Automobile Sales Data for June 2018: July 1, 2018

  • Nikkei Manufacturing PMI Data: July 2, 2018

  • Nikkei Services PMI Data: July 4, 2018

Current Outlook:

– Be cautious with any new purchases.

– Form a defensive game plan for your portfolio.

– Stay disciplined and exercise sound sell rules.

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

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