Nifty Adds Sixth Distribution Day; Nifty Bank Declines, Pharma Stocks Outperform

Nifty, -0.4%; Sensex, -0.5%; Nifty Midcap, -0.5%; Nifty Smallcap, -1.5%; Model Portfolio, +1.5%

Market Pulse Uptrend Under Pressure

Distribution Day Count: Six

Nifty gapped lower this morning and remained under pressure for the most part of the session. However, last hour buying helped Nifty close ~100 points off lows. As the volume was higher compared with the previous session, we will consider today’s action as a distribution day. Nifty added a third distribution day in four sessions. Clustering of distribution is always a matter of concern. Selling pressure was high in broader indices. Nifty Midcap and Smallcap closed 0.5% and 1.5% lower, respectively. On the sectoral front, Nifty Pharma (+1.9%), Metal (+1%), and Auto (+0.2%) closed in the green. Nifty Bank (-2.1%), Realty (-1.9%), and Financial Services (-1.8%) were the top losers. Advance-Decline ratio was skewed toward decliners. Out of 2,190 stocks traded, 557 advanced, 1,276 declined, and the rest remained unchanged.

As the market is in an Uptrend Under Pressure, investors should proceed ahead with caution. Unless a stock shows exceptional fundamental and technical strength, no new addition to the portfolio is advised. Investors should consider booking profits in stocks that have performed well and have advanced 20–25% from their ideal buy points. Looking forward, we will change the status to a Downtrend, if more distribution days are added or if Nifty breaches the 50-DMA (11,154) and the 200-DMA (10,800). On the flip side, the status will be back to a Confirmed Uptrend if Nifty retakes 11,795 level (high during the recent rally).

Key News

Reliance Industries (+2.6%) announced that Silver Lake will invest Rs 7,500 crore into RRVL, a subsidiary of Reliance Industries. This investment values RRVL at a pre-money equity value of Rs 4.21 lakh crore. Silver Lake’s investment will translate into a 1.75% equity stake in RRVL on a fully diluted basis.

Eveready Inds.(India) (-0.8%) reported Q1 FY21 results. PAT at Rs 25 crore increased significantly compared with Q1 FY20 (Rs 6.9 crore). Revenue was down 20.5% y/y to Rs 263.4 crore. Margin expanded 810bps y/y to 15.7%.

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