Market Pulse: Confirmed Uptrend

Distribution Day Count: Four

Global stock markets: Dow 30, -0.8%; Nasdaq, -0.7%; S&P 500, +0.9%; Kospi, -1.9%; Nikkei, -2.3%; Shanghai Composite, -0.7%

Yesterday, Nifty opened briefly in the red and came under selling pressure in the first hour of trading. It continued to slip further, breached its 21-DMA, and dropped below 15,700. However, in the last hour, Nifty recovered more than 50 points from its low, but closed below its 21-DMA. Yesterday’s volume was lower compared to that of the previous session, hence we have not considered it as a distribution day. The broader market outperformed benchmark indices. The advance-decline ratio was in favor of decliners. Out of 2,265 stocks traded, 748 stocks advanced, 1,170 stocks declined, and the remaining closed flat. On the sectoral front, barring Nifty IT (+0.1%), all indices closed in the red. Nifty Bank, Auto, Metal, and Financial Services closed 1–2% lower.

The distribution day count is currently elevated to four. Nifty closed below its 21-DMA. However, the volume was lower. If the index falls further and adds a distribution day, we may change the market status to an Uptrend Under Pressure. We continue to recommend a selective approach to increasing risk. Focus on quality ideas emerging out of sound bases with RS line at or near new highs while reducing exposure to stocks breaking below key support levels.

Key News

Bharat Dynamics signed a contract worth Rs 499 crore with the Ministry of Defense to manufacture and supply Akash missiles to the Indian Air Force.

Tata Consultancy Svs. announced Q1 FY22 results, which were slightly below street estimates. Revenue was up 3.7% q/q to Rs 45,411. Profit dropped 2.6% to Rs 9,008 crore. Margin declined 130bps to 25.5%.

Buy Watchlist: Oracle Finl.Svs.Sftw., Schaeffler India, Orient Electric, Indo Count Inds., Sbi Cards And Payment Services, State Bank Of India, Colgate-Palmolive India, Sharda Cropchem, Berger Paints India, Icici Bank, Tata Power, Ratnamani Metals & Tubes, Minda Industries, Lumax Auto Technologies, Jk Cement, Pnc Infratech, L&T Technology Services, and Hcl Technologies (Nse).

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