Market Pulse: Confirmed Uptrend

Distribution Day Count: Nifty50: Two Nifty Midcap100: Four Nifty Smallcap100: Five

Global stock markets: Dow 30, -0.1%; Nasdaq, +0.3%; S&P 500, +0.03%; Nikkei, +0.2%; Kospi, -0.6%; Shanghai Composite, +0.3%.

Yesterday, Nifty opened about 50 points higher and advanced further to hit fresh highs of 17,226 in the first hour of trading. However, it staged a reversal from there, turned volatile as the day progressed, and closed near the day’s low, holding a minor loss. Volume was lower than in the previous session. This helped the index avoid adding a distribution day. In the broader market, Nifty Midcap and Smallcap advanced 0.8% and 0.3%, respectively, outperforming the major index.

On the sectoral front, results were mixed. Nifty Realty (+5.6%) emerged the top gainer for the day, followed by PSU Bank (+0.9%) and Pvt Bank (+0.5%). On the flip side, Nifty Metal (-1.8%) and Nifty IT (-1.3%) were the top two decliners. FIIs net bought shares worth Rs 666 crore, while DIIs net sold shares worth Rs 1,287 crore.

The distribution day count now stands at two as one expired yesterday. Further, Nifty is now trading near its all-time high and is placed above all its key moving averages. We would like the index to continue this trend. After such a sudden rally, one must also be prepared for some mild profit booking. In the process, 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

Axis Bank: RBI imposes Rs 25 lakh penalty for non-compliance with provisions of KYC norms.

State Bank Of India: The bank raised Rs 4,000 crore of the Basel compliant Additional Tier 1 (AT1) bonds.

Eicher Motors: August sales were at 45,560 units compared to 50,144 units y/y.

Vedanta announces interim dividend of Rs 18.5 per share, amounting to Rs 6,877 crore.

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