Market Pulse: Rally Attempt

Global stock markets: Dow30, +0.01%; S&P 500, -0.02%; Nasdaq, -0.3%; Nikkei, +0.4%; Kospi, -0.9%

Nifty opened flat yesterday, gradually moved higher, and closed near the day’s high. As gains were less than 1.5%, we did not consider it a follow-through day. Note that even though market breadth has improved and Nifty reclaimed its 21-DMA, volumes were comparatively lower on Nifty and the index is still below its 50-DMA. On the sectoral front, all sectors closed in the green. Nifty Metal (+2.7%) was the top gainer, followed by Nifty Bank (+1.5%). FIIs were net sellers (Rs 1,454 crore), while DIIs were net buyers (Rs 1,463 crore).

Looking ahead, we would prefer to see a follow-through day before shifting the market to a Confirmed Uptrend. A follow-through day is a solid up session, generally a 1.5% or higher gain, with volume higher than the previous day. Should this occur, the focus will be on ideas breaking out of early-stage base patterns and showing the best relative strength with good accumulation. On the flip side, Nifty is still below its 50-DMA and about 5% off its last high. So, if it breaches its recent low of 14,151, the market will be moved back to a Downtrend.

Key News

Key Q4 FY21 results today: Biocon (Nse), Bajaj Finserv, and Uti Asset Management Company.

Axis Bank’s Q4 FY21 NII grew 11% y/y to Rs 7,555 crore. It reported PAT of Rs 2,677 crore against loss of Rs 1,388 crore in Q4 FY20. GNPA stood at 3.70% versus 3.44% in Q3 FY21, while net NPA stood at 1.05% versus 0.74% in Q3 FY21.

T V S Motor’s Q4 FY21 results beat estimates on all fronts. Revenue grew 52.9% y/y to Rs 5,321 crore. Margin expanded 310bps y/y to 10.1%.

Britannia Inds.’s Q4 FY21 PAT and margin missed estimates, while revenue was in line with estimates. PAT was down 3.3% y/y to Rs 360 crore. Revenue grew 9.2% y/y to Rs 3,130. Margin expanded 30bps y/y to 16.1%.

O’Neil Market Condition Report

For the 24 emerging markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 30%; Rally Attempt, 12%; Uptend Under Pressure, 52%; Downtrend, 6%.

For the 24 developed markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 65%; Rally Attempt, 10%; Uptend Under Pressure, 25%; Downtrend, 0%.

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