Nifty opened with modest gains and remained volatile during the first half of the session. It managed to hold above yesterday’s low. In the second half, there was good buying, pushing Nifty higher. Nifty is trading 3% and 11% above its 50- and 200-DMA, respectively. Today’s volume was higher across the board. On the sectoral front, Nifty Bank was the top gainer, led by 12% gains in Kotak Bank. Nifty Auto, FMCG, Pharma, and Financial Services closed 1–2% higher. On the flip side, IT stocks were under pressure. Though there were notable gains in selected large and midcap stocks, today’s gains were not broad based. Of 2,222 stocks traded, 885 advanced, 917 declined, and the rest remained unchanged.

Looking forward, we 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. However, we are positive on the general market as we can find further evidence of good behavior in leaders that have already broken out; for example, HDFC Bank, Reliance, Infosys, and Asian Paints. During this time, one should look for stocks with quality fundamentals, RS line trending higher, and breaking out from consolidation areas.

Key News

Amara Raja Batteries (+3.5%): Q2 FY21 results beat estimates on all fronts. Revenue increased 14.2% y/y to Rs 1,936 crore. PAT was down 8% y/y to Rs 201 crore, while margin contracted 40bps y/y to 17.6%.

Ceat (+1.4%) Q2 FY21 results beat estimates on all fronts. Revenue increased 17% y/y to Rs 1,978.5 crore. PAT came at Rs 182 crore compared with Rs 44 crore y/y. Margin expanded 470bps y/y to 14.8%.

Vst Industries (Nse) (+1.9%): Q2 FY21 PAT was up 16% y/y to Rs 88.5 crore. Revenue was flat y/y at Rs 300 crore. Margin expanded 520bps y/y to 37.6%.

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