Nifty opened with modest losses. It moved sideways in early hours, but selling pressure intensified in the second half, dragging it below 11,800. Nifty closed less than a percent above its 21-DMA. Nifty is trading 2.3% and 10% above its 50- and 200-DMA, respectively. Today’s volume was a little higher than Friday’s session. On the sectoral front, Nifty Auto and Metal closed with a loss of more than 3%. Nifty Bank, Financial Services, Pharma, and IT closed 1–2% lower. The selling was broad-based. Of 2,229 stocks traded, 1,219 advanced, 645 declined, and the rest remained unchanged. INR continued to depreciate and closed at Rs 73.85 per USD.

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

Sbi Life Insurance Co (+1.1%) Q2 FY21 net premium income rose 27.2% y/y to Rs 12,858 crore. PAT increased to Rs 299.7 crore compared with Rs 129.8 crore y/y.

Kotak Mahindra Bank(Nse) (+2.5%) announced its September quarter results during market hours. It came above consensus on all fronts. PAT rose 26.7% y/y to Rs 2,184 crore. NII was up 16.8% y/y to Rs 3,913 crore. Asset quality improved. GNPA at 2.55% compared to 2.7% q/q NNPA at 0.64% compared to 0.87% q/q. Net Interest Margin at 4.5% compared to 4.4% q/q. Slippages at Rs 264 crore versus Rs 796 crore q/q.

Poly Medicure (-0.7%) Q2 FY21 PAT up 23.2% y/y to Rs 35 crore. Revenue rose 14.8% y/y to Rs 199.6 crore. Margin expanded 420bps y/y to 28.3%.

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