Nifty escapes Distributions; ends below 9000

Today’s Action

Nifty, -3.0%; Sensex, -3.2%; Nifty Midcap, -3.1%; Nifty Smallcap, -3.8%; Model Portfolio, 0%

Market Pulse Confirmed Uptrend

Indian markets reacted sharply to the global cues after prices of WTI crude crashed and landed in negative territory for a while. Nifty gapped down around 250 points and traded sideways in the first half of the day’s session. Post noon, it was a cup-shaped trading session as buyers outweighed sellers. 84% of Nifty50 stocks declined today, led by Indusind Bank (Nse) (-12.3%) and Bajaj Finance (-9.1%). On the flip side, Dr Reddys Labs. (Nse) (+4.4%) and Bharti Infratel (+2.3%) were the major advancers. 

Nifty escaped distribution as today’s volume was slightly lower than that of the previous session.

Barring Nifty Pharma (+2.5%), all the sectoral indices closed lower. Nifty Pvt Bank (-5.9%), Bank (-5.4%), and Nifty Auto (-5.3%) were the major decliners. Nifty Metal and Media indices closed more than 5% lower. Of 2,115 stocks traded, 495 advanced, 1,311 declined, and the remaining traded flat.

We continue to be very selective about taking any fresh positions. It is important that investors don’t play all their cards at once. We would suggest adopting an investment approach where you begin with a small allocation and increase it as and when the market advances further.

Without trying to predict and decode stories, we will take what the market gives us and continue to monitor unfolding conditions. Stocks with higher relative strength and superior fundamentals can do well. Some leading stocks have sharply corrected. Wait for them to put in at least a short period of consolidation and show a constructive breakout from that range. Buying without this period of constructive behavior into a straight upmove off the bottom, puts you at a risk of drawdown.

Key News

Icici Bank The stock declined sharply after reports of $100M exposure to Ocean Tankers, a unit of Singapore oil-trading firm Hin Leong Trading.

Morepen Laboratories: Its shares hit an upper circuit after the company received license to manufacture Hydroxychloroquine from Himachal Pradesh State Drug Controller.

IT stocks came under pressure as the U.S. President tweeted about plans of temporary suspension of immigration.

Aurobindo Pharma The USFDA classified its unit IV of Hyderabad as voluntary action indicated (VAI).

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Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.