Global stock markets: Dow 30, +1.9%; S&P, +1.7%; Nasdaq, +1.9%; Nikkei, +0.9%; Kospi, +0.1%; Hang Seng, -0.8%

Yesterday, Nifty opened on a slightly positive note and continued to trade higher during the day. Though the benchmark indices closed with notable gains, the midcap and smallcap indices closed in the red and market breadth was negative. Nifty is trading 3.5% and 9.3% above its 50-and 200-DMA, respectively. FIIs’ net buying was Rs 1,093 crore, while DIIs’ net selling was Rs 1,109 crore. It was a mixed reaction on the sectoral front. Nifty Auto (+1.4%) advanced the most, followed by Nifty IT (+0.6%) and Pvt Bank (+0.6%). On the flip side, Nifty Media (-2.5%), Realty (-1.9%), and Metal (-1.5%) were the decliners.

Looking forward, we would 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). Should this occur, the focus will be on ideas that show the best relative strength with good accumulation. Stocks that recover the quickest tend to lead the next run. On the flip side, if Nifty breaches its recent low of 10,790, the market will be moved back to a Downtrend.

Key News

Tata Consultancy Svs. reported Q2 FY21 results. PAT rose 6.6% q/q and was down 7% y/y to Rs 7,475 crore, a tad below consensus estimates. Revenue was up 4.73% q/q to Rs 40,135 crore (higher than estimates). Margin expanded to 26.2% from 23.6% in the last quarter. The board has approved a share buyback proposal amounting up to Rs 16,000 crore at Rs 3,000 per share.

Wipro (Nse)’s board will consider a buyback plan on October 13.

RBL Bank released Q2 update. Deposits grew 5% q/q and 3% y/y. Gross advances declined 3% y/y and 1% q/q. Q2 FY21 CASA ratio came in at 31.1%, as against 30.1% q/q and 26.5% y/y.

O’Neil Market Condition Report

For the 24 emerging markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 15%; Rally Attempt, 10%; Uptrend Under Pressure, 50%; Downtrend, 25%.

For the 24 developed markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 20%; Rally Attempt, 5%; Uptrend Under Pressure, 65%; Downtrend, 10%.

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