MARKET PULSE
Status:
Uptrend Under Pressure
Highlights:
Two up and two down days
Weekly Market Review:
After two weeks of continuous decline, India’s key indices made a spirited attempt to bring home decent gains.
However, that attempt was cut short as the PNB fraud news played spoilsport. Weakness in PSU banking stocks did not take much time to spread across the market.
In the end, India’s key indices were forced to give up early-week gains and end almost flat. Nifty inched lower by 0.03% while Sensex closed 0.01% higher.
The four-day trading week began on a robust note, as strong global cues lifted investor sentiment. Sensex and Nifty pocketed impressive gains of 0.87% and 0.81% in Monday’s session.
Market remained closed on Tuesday on account of Mahashivratri.
Wednesday’s trading session got marred by late selling on the bourses as market participants reacted to the news of Rs 11k crore fraud in Punjab National Bank.
While PNB fraud continued to play on investors’ minds, Thursday saw a positive outing for India’s key indices, with low inflation data boosting sentiment to some extent.
The wholesale price inflation (WPI) index eased to a six-month low of 2.84% in January. It dropped for the second straight month after scaling an eight-month high in November 2017.
Friday made things worse, as the benchmark composites went downhill in the second-half of the session. With both the Sensex and Nifty sliding around 0.8-0.9%, the early-week gains were wiped off completely.
In the broader market, selling pressure turned out to be more intense, as the Nifty Midcap and Smallcap indices lost 0.9% and 1.5%, respectively.
On the sector front, the Nifty PSU Bank had a forgettable week, as the index tumbled by a massive 8.4%. Barring Nifty Energy (+1.2%) and Nifty Metal (+0.1%), all other sector indices ended on the losing side.
MarketSmith India’s IND 47 index, our proprietary list of top 47 stocks in chart and fundamental characteristics, outperformed the market with a modest gain of 0.4% this week.
Out of the two down days this week, both qualified as distribution day on the Sensex while only one turned out to be a distribution day on the Nifty. With this, the distribution day count stands at five on the Sensex and four on the Nifty. Both key indices continue to live below their 50-DMAs. In view of this, the market condition remains unchanged at Uptrend Under Pressure.
The Nifty Midcap and Smallcap indices have corrected 10% and 13.5% from their all-time highs, respectively. Looking at the overall weakness in the general market, caution should be on top of your mind.
During the coming week, the following event could serve as a market mover:
- Expiry of February series of derivative contracts: February 22, 2018
Current Outlook
– Be cautious with any new purchases.
– Form a defensive game plan for your portfolio.
– Stay disciplined and exercise sound sell rules.
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