Today’s Action:
Market trends lower on poor volume; escapes distribution day.
Daily Market Review:
For the second session in a row, the Indian stock market closed in a negative zone with the Nifty trading well below its 11,000 level.
Pharmaceutical stocks led the Monday’s downfall, as heavyweights like Dr Reddys Laboratories (-9.7%), Lupin (-5.5%) and Sun Pharm.Industries (-4.6%) observed selling pressure.
Market sentiment was also negative on account of higher inflation data. Amid rising fuel prices, the wholesale inflation soared to 5.77% in June, the highest level in over four years. This increases the chances of an interest rate hike by the RBI in its monetary policy meet next month.
In the end, the Nifty and the Sensex gave away 0.7% and 0.6%, respectively. Volumes on key indices remained low compared to Friday’s levels and hence, both the indices escaped the brunt of distribution.
The broader market was hit hard, as the Nifty Midcap and Smallcap dropped 2.6% and 3.1%, respectively.
On expected lines, decliners overtook gainers with a huge margin of 9-2 on the NSE.
Barring Nifty IT (+0.6%), almost all sectoral indices closed in negative territory. Pharma and Metal were the most affected, losing 4.1% and 3.6%, respectively.
MarketSmith India’s IND 47 index, our proprietary list of top 47 stocks in chart and fundamental characteristics, lost 1.7%.
Talking about market direction, the distribution day count remains unchanged at four on the Sensex and five on the Nifty. The market condition stays at a Confirmed Uptrend.
With today’s fall, both the Nifty Midcap and Smallcap breached their previous lows of 17,813.75 and 6,999.10, respectively. Hence, we moved the market status of both the indices to a Downtrend.
Current Outlook:
– Market environment conducive for purchases, but remain selective.
– Focus on fundamentally strong stocks breaking out of strong technical patterns.
– Stay disciplined and exercise sound buy and sell rules.
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