Weekly Big Picture : Nifty Fails to Defend 11,000; Bank and Metal Stocks Decline Sharply

Weekly Action

Nifty, -1.9%; Sensex, -1.9%; Nifty Midcap, -2.5%; Nifty Smallcap, -4.3%; and Model Portfolio, -2.2%.

Market Pulse Downtrend

Weekly Market Review

After declining 7.3% last week due to fears of widespread coronavirus, Nifty managed to defend 11,000 mark till Thursday. However, today due to the spillover effect of the moratorium and the RBI superseding the board of Yes Bank, the pain was fairly evenly distributed dragging Nifty below the 11,000 mark. As the day one low was breached intraday, the count for an attempted rally resets. We will wait for a blue or pink rally day to consider day one of an attempted rally.

Currently, Nifty is trading 8.2% and 5.8% below its 50-DMA (11,997) and 200-DMA (11,685), respectively. The damage in leading stocks has been significant. Reliance IndustriesHdfc Bank, and Housing Development Fin. are trading 6–8% below their 200-DMA. The market breadth has also shrunk. Nifty Midcap and Smallcap are down 2.5% and 4.3%, respectively, for the week.

On sectoral front, it was a hard week for Nifty Bank, Realty, Media, and Financials. All these sectors were off more than 4%. On the flip side, Nifty Pharma (+5.2%) and IT (2.5%) bucked the trend. Currently, all the sectors are trading below their 50- and 200-DMA. There were bright spots in the behavior of certain specialty chemical stocks and mask manufacturing companies like 3m India (Nse) and Hnywell.Atmtn.Ida. (Nse). Action in currency was also volatile. INR went above Rs 74 versus USD in early trade today. However, in the second half, INR was up 50 paise from its lows.

We continue to remain in a Downtrend and suggest a cautious approach until general market conditions improve. Without trying to predict and decoding stories, we will take what the market gives us and continue to monitor unfolding conditions. In our portfolio, we continue to hold high relative strength quality ideas trading above logical support and consolidating in a downtrend market. We may book profit or cut losses if any of our portfolio stocks show technical weakness.

Key News

Maruti Suzuki India’s February production was down 5.4% y/y at 1.40 Lakh units. The stock closed 40bps higher.

Yes Bank’s shares nosedives more than 50% as the government placed the bank under moratorium and capped withdrawals to Rs 50,000 for a month till April 3. The RBI superseded the board of the private lender citing a steady decline in its financial position.

What do you think? Please email us any questions or comments.

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