Weekly Big Picture : Pharma And FMCG Stocks Shine, Financial Stocks Most Affected

Weekly Action

Nifty, -6.7%; Sensex, -7.5%; Nifty Midcap, -3.8%; Nifty Smallcap, -2.3%; Model Portfolio, 0%.

Market Pulse : Confirmed Uptrend

Weekly Market Review

Nifty, after a negative opening to the holiday-truncated week, recorded a follow through day on Tuesday as index gained about 3.8%, on higher volume than the previous session. This led to a change in market status to a Confirmed Uptrend from a Rally Attempt. However, the index staged a reversal in the next two sessions and closed the volatile week with their seventh straight week of declines. Further, today’s action qualified as a distribution day as the index fell more than 0.2% today, with volume higher than that of yesterday’s session. The occurrence of distribution days so close to a follow-through day is not a positive factor.

Barring Nifty FMCG (+3.1%) and Nifty Pharma (+8.1%), all the sectoral indices closed in negative territory for the week. Nifty Pvt Bank (-14.7%), Nifty Bank (-13.6%), and Financial (-12.2%) declined the most. On the macro front, eight core sector industries of the country recorded growth of 5.5% in February compared with expansion of 2.2% for the same month a year ago.

Though market status has been changed to a Confirmed Uptrend after witnessing a follow-through day, we will be very selective about taking any fresh positions. We will look for additional follow-through days that will strengthen the current uptrend. Further, we will look for leadership among some good stocks to push the market up. Some leading stocks have sharply corrected. Wait for them to put in at least a short period of consolidation and show a constructive breakout from that range. Buying without this period of constructive behavior into a straight up move off the bottom puts you at risk of drawdown. On the flip side, tracking distribution days is very important. Accumulation of distribution days can halt the uptrend.