Global stock markets: Dow 30, -0.4%; S&P, -0.2%; Nasdaq, -0.1%; Nikkei, -0.8%; Hang Seng, -0.6%

Yesterday, Nifty opened with strong gains and continued to move higher, thereby crossing 12,000 mark. In the second half, Nifty staged a downside reversal and dropped more than 200 points off highs. However, in the last hour, Nifty jumped off lows and recovered more than 150 points to close 0.3% higher. Volume was higher across the board. Nifty is trading 4% and 11.5% above is 50- and 200-DMA, respectively. On the sectoral front, gains were led by Nifty Realty (+4.4%), Metal (+2.3%), and Bank (+1.4%). On the flip side, Nifty IT, FMCG, and Auto underperformed.

Looking forward, 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 being higher than the previous day). Should this occur, the focus will be on ideas that show the best relative strength with good accumulation. Stocks that recover the quickest tend to lead the next run. On the flip side, if Nifty breaches its recent low of 10,790, the market will be moved back to a Downtrend.

Key News

Asian Paints, Bajaj Auto, and Sbi Cards And Payment Services will report their Q2 FY21 results today.

J K Tyre & Inds. reported Q2 FY21 results. Profit fell 38.2% y/y to Rs 105 crore, while revenue increased to Rs 2,274.8 crore from Rs 2,155 crore on a y/y basis. Margin improved 180bps to 15.6%.

Kpit Technologies Limited reported Q2 FY21 results. Profit was up 12.1% q/q to Rs 27.2 crore, while revenue fell to Rs 485.5 crore from Rs 492.7 crore on a q/q basis.

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, 15%; Rally Attempt, 10%; Uptrend Under Pressure, 50%; Downtrend, 25%.

For the 24 developed markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 20%; Rally Attempt, 5%; Uptrend Under Pressure, 65%; Downtrend, 10%.

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