Updated: September 30, 2020
By
MarketSmith India Research Team
Today’s Action
Nifty, +0.2%; Sensex, +0.3%; Nifty Midcap, -0.01%; Nifty Smallcap, -0.3%;
Market Pulse Rally Attempt
Nifty made a flat opening and traded volatile in the first half of trading session. In the second half, it traded toward the day's high of 11,295. However, in the last hour, the index witnessed selling pressure and closed with minor gains. Volume was slightly higher than that of the previous session. Yesterday, we changed the market status to a Rally Attempt as Friday was a blue rally day (Day 1) and Nifty managed to stay above its Day 1 low for two consecutive sessions. Nifty is currently trading 0.7% below its 50-DMA. We would like the index to reclaim its 50-DMA on above average volume. In the broader market, Midcap closed flat, while Smallcap closed 0.3% lower.
On the sectoral front, mixed reactions were observed. Nifty FMCG (+1.3%) advanced the most, followed by Nifty Pharma and IT, which advanced 0.5% and 0.4%, respectively. On the flip side, Nifty Metal (-2.1%) and PSU Bank (-1.1%) were the major two decliners. The advance-decline ratio was in favor of decliners. Of 2,208 stocks traded, 847 advanced, 968 declined, and the rest remained unchanged.
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 the Nifty breaches its recent low of 10,790, the market will be moved back to a Downtrend.
Key News
India’s current account balance registered a surplus of $19.8B in Q1 FY21 as against $0.6B in the last quarter of FY20.
India’s external commercial borrowings recorded a net outflow of $1.1B in Q1 FY 21 as compared to inflow of $6B in Q1 FY20.
Nelco (Nse) formed a collaboration on terrestrial facilities, commercial distribution, and regulatory frameworks to offer Telesat LEO satellite connectivity in India. The stock closed 1.4% higher.