Market Pulse: Confirmed Uptrend

Distribution Day Count: Three

For the past two weeks, Nifty struggled to surpass the 17,950 level. On Monday, Nifty scaled 18,000. However, it failed to close above 18,000 on Tuesday. On Wednesday, the index again closed above 18,000 and today extended gains above 18,300. Tata Group stocks were the top gainers during the week. On all four days, Nifty closed in the green, so there has been no new distribution day this week. Nifty is now trading 3.2% and 6.5% above its 21-and 50-DMA, respectively. Though the benchmark and Midcap indices were moving upward, there were only a few pockets of strength in Smallcap.

On a weekly basis, barring Nifty IT (-1.8%), all indices closed higher. The IT index was down mainly due to weakness in TCS after a little disappointment in its Q2 FY22 earnings. Nifty Auto (+6.5%) was the top gainer. Nifty FMCG, Bank, Financial Services, Realty, and Metal closed 3.5–6% higher. Today, the advance-decline ratio was close to one. Of 2,049 stocks traded, 992 stocks advanced, 997 declined, and the remaining closed flat. One should note that though benchmark indices are making new highs, market breadth was not broad-based during the week.

The distribution day count currently stands at three. Further, Nifty is trading at new highs, above all its key moving averages. We would like the index to continue trading above its key moving averages. We maintain a positive view on the market, but if the index adds a couple of distribution days, stages a reversal, or breaches its key moving averages, we may change the market status to an Uptrend Under Pressure. Reducing exposure to stocks breaking below their 21- or 50-DMA on higher volume is important.

Key News

-September WPI inflation came in at 10.66%. It was little below estimates due to moderating food prices.

Century Text. (Nse)’s Q2 FY22 PAT increased to Rs 44.7 crore against a loss of Rs 14 crore y/y. Revenue grew 67% y/y . Margin expanded 2.3% y/y to 11%.

Tata Motors’s upcoming car, Tata Punch, scored a five-star safety rating for adult and four-star rating for child occupants in the latest Global New Car Assessment Programme.

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