Today’s Action
Nifty, +1.1%; Sensex, +1.2%; Nifty Midcap, +1.3%; Nifty Smallcap, +0.7%; Model Portfolio, +0.00%
Market Pulse Confirmed Uptrend
Nifty opened up to solid gains this morning. It remained volatile during the day but managed to closed in the upper half of the day’s range. Banking stocks led the gains today, especially private banks. On the flip side, Nifty Pharma and FMCG were each down 1–2%. Of 2,110 stocks traded, 985 advanced, 807 declined, and the remaining traded flat.
Our primary indicators remain healthy as the distribution count is zero and leaders are acting reasonably well. Yesterday, distribution day count was down to zero as Nifty rallied 5% from the last distribution day that occurred on April 15. We remain in a Confirmed Uptrend and are open to increasing risk selectively in quality names coming out of proper bases.
Though distribution day is a primary indicator of market weakness, one should also keep a check on other indicators. When in a Confirmed Uptrend, it is an anomaly to see heavy volume with no upward price progress and if we see clusters of this activity we suspect that the momentum may have shifted.
Currently, picking up the stock from a sector as a whole in positive momentum becomes important. Group rank feature can be very helpful. Look for stocks that are among the top 40 groups and show improvement in rank. It has been observed that what is breaking out of a proper base and among top group rank is working well. It is also important that investors don’t play all their cards at once. In our portfolio, we are skewed toward Pharma and Chemical stocks. In the last few days, we had a decent amount of quality leaders in these sectors trading through justifiable entry points.
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.
Key News
Axis Bank: The board approved the acquisition of 29% stake in Max Life Insurance. The stock closed 6.5% higher.
Jk Paper: The board approved the buyback of equity shares at a price not exceeding Rs 130 per share and for an amount not exceeding Rs 100 crore. The stock advanced 4%.
T V S Motor: The company approves issuing NCDs up to Rs 500 crore on a private placement basis. The stock closed 1% lower.
Natco Pharma: The company gets USFDA approval for its first sANDA product from its new drug formulations facility in Visakhapatnam. The stock closed 1% lower.
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