Weekly Big Picture : Nifty Retakes 200-DMA; Infosys Maintains EBIT Margin Guidance

Market Pulse: Confirmed Uptrend

Weekly Action

Nifty, +1.1%; Sensex, +1.2%; Nifty Midcap, -0.2%; Nifty Smallcap, -0.4%; and Model Portfolio, +0.9%.

Weekly Market Review

The Indian markets recovered a bit during the week, thanks to Wednesday’s action. Nifty found support at its 50-DMA and retook its 200-DMA during the week after a brief breach last Friday. During the week, even though it fell more than 0.2% on two occasions, it escaped distribution due to lower volume as compared with the previous sessions.

Broader markets continued to underperform the market. Nifty Midcap and Smallcap were down 0.2% and 0.4%, respectively. The breadth is yet to improve.

On the sectoral front, it was a mixed reaction. Nifty Metal (+1.7%), Financial (+1.3%), and Bank (+1.1%) were the top gainers. On the flip side, Pharma (-1.5%) and PSU Bank (-0.4%) were the top decliners. During the week, Financial Services retook its 50-DMA to join the FMCG and Auto indices that are trading above their 50-DMA. FIIs continued their selling spree for the current week as well; they sold shares worth ~Rs 4,000 crore in October.

Though the market is in a Confirmed Uptrend, our approach has turned cautious. Currently, Nifty is trading 1.9% above its 50-DMA. If that level is breached on higher volume, we might downgrade the market to an Uptrend Under Pressure. According to our methodology, if a stock has great prospects, we enter once it breaks from a base pattern into new highs. Likewise, if our stock pulls back into a pivot or recedes to a level or hits a stop loss of 8%, we trim/exit positions in that stock.