Today’s Action
Frontline indices records sharp losses, broader market bucks the trend.
Daily Market Review
Major indices extended losses for the third straight session, as rising crude oil prices dampened investors’ sentiment.
Both key indices started the day on a robust note after BJP leader B.S. Yeddyurappa was sworn in as Chief Minister of Karnataka. However, India’s barometer altered its gains with the crude oil peaked to $ 80 per barrel for the first time in four years.
Rising oil prices, higher yield on the 10-year U.S. Treasury note and a weakening rupee are creating concerns that market bulls are finding hard to swallow.
With the spike in the commodity, the Nifty tumbled 0.5% and the Sensex 0.7%.
Volume was higher for the Sensex compared with Wednesday, leading to an addition of distribution count. However, Nifty escaped adding it as the volume was marginally lower.
For a change, winners led losers by a 7-6 margin on both NSE and BSE.
The broader market bucked the market trend and did better, as the Nifty Midcap took back 0.4% and the Smallcap surged 1.0% .
Barring few, most of the sector indices were in negative territory. Metal and Financial stocks were the most affected losing 0.7% and 0.6%, respectively.
Our proprietary list of leading stocks the MarketSmith India IND 47 index that exhibits strong technical and fundamental characteristics lost 0.2% today.
As the continuous selling on the bourses makes investors wonder about if the market is headed for another one of its turns. Both key indices have a comfortable distribution day count of two and both still trade above their key support of 50- and 200-day lines. Hence, the market condition remains unchanged at a Confirmed Uptrend.
That being said, the midcap and smallcap benchmarks have seen rising distribution in recent times and both the indices are still trading below their 50-day lines.
Current Outlook
– Market showing signs of divergence; key indices in uptrend while midcap and smallcap indices turn weak.
– Keep buying decisions restricted to stocks with exceptional fundamentals and technical strength.
– Stay disciplined and exercise sound sell rules.
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