Market Pulse: Confirmed Uptrend

Distribution Day Count: Two

Global stock markets: Dow 30, +0.2%; Nasdaq, +0.03%; S&P 500, +0.2%; Nikkei,+0.4%, Kospi, +0.6%; Shanghai Composite, +0.1%

Yesterday, Nifty opened flat and traded in a narrow range for the day to close 0.20% lower. Volume was less compared with Friday’s session. The index thus avoided adding a distribution day. The distribution day count is down to two as two expired last week. In the broader market, Nifty Midcap closed flat, but the Smallcap index advanced 0.3%. On the sectoral front, mixed actions were observed. Nifty IT, Metal, Media, and Pharma gained 0.2–0.6%. On the flip side, Nifty Realty (-1%) and Nifty Auto (-0.6%) were the top two decliners. Month-to-date in July, FIIs were net sellers with Rs 14,744 crore, while DIIs were net buyers worth Rs 11,737 crore.

A low distribution day count and Nifty trading above key moving averages is a positive setup. On the flip side, if the index breaches key moving averages on higher volume and adds a couple of distribution days, 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.

Companies Announcing Results Today: Interglobe Aviation, Dr. Reddy's Laboratories, Dixon Technologies (India), Indusind Bank (Nse), Torrent Pharmaceuticals, and others.

Key News

Larsen & Toubro’s Q1 FY22 PAT grew almost four times y/y to Rs 1,174 crore. Revenue grew 38% y/y Rs 29,334.73 crore. Overall, the result was below estimates. The company said project progress was impacted by regional lockdowns, shortage of industrial oxygen, and supply chain disruptions.

Axis Bank’s Q1 FY22 PAT grew 96% y/y to Rs 2,160 crore, but fell 19% q/q. NII rose 11% y/y to Rs 7,760 crore. NIM for the June quarter stood at 3.46%.

Tata Motors reported loss of Rs 4,450 crore in Q1 FY22 against a loss of Rs 8,437 crore y/y. Revenue doubled y/y to Rs 66,406.45 crore.

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