Market Pulse: Confirmed Uptrend
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.
Tata Steel: The company’s crude steel production for the September quarter grew 4.65% y/y to 4.5MT. It is expecting the demand to pick-up with the ending of the monsoon season and the commencement of the festive season. The stock was up 2.7% today.
Indiabulls Ventures: Shares were up 4.3% as its board approved Rs 1,000 crore of share buyback at a share price of Rs 150 via the ‘tender offer’ route. The buyback is subject to shareholders’ approval by way of a special resolution.
Infosys: The company reported its September quarter results after market. EBIT margin came in at 21.7% versus 20.5% in Q1. Revenue growth guidance increased to 9.0-10.0% from 8.5-10%. EBIT margin guidance was maintained at 21-23%. The stock was up 4% today.