Updated: October 06, 2020
By MarketSmith India Research Team
Today’s Action
Nifty, +1.4%; Sensex, +1.5%; Nifty Midcap, +0.6%; Nifty Smallcap, +0.5%; Model Portfolio, +0.02%
Market Pulse Rally Attempt
Nifty gapped up for the third consecutive session. It traded in a narrow range of just 50 points until the last hour of sharp rally. Today’s rally was led by Housing Development Fin. (+7.6%) and Tata Motors (+7.7%). Around 70% of Nifty50 stocks closed in the green. Nifty is just 130 points below its previous rally high of 11,794.
On the sectoral front, the majority of sectoral indices advanced. Nifty Fin Service (+3.2%) advanced the most, followed by Nifty Realty and Pvt Bank, which advanced 2.6% and 2.3%, respectively. On the flip side, Nifty Metal (-0.7%), FMCG (-0.2%), and Pharma (-0.1%) were the decliners. The advance-decline ratio was in favor of advancers. Of 2,216 stocks traded, 1,083 advanced, 763 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 Nifty breaches its recent low of 10,790, the market will be moved back to a Downtrend.
Key News
Indusind Bank (Nse) reported provisional numbers for Q2 FY21. Deposits grew 10% y/y to Rs 2,28,460 crore. Net advances increased 2% to Rs 2,00,242 crore. CASA ratio improved 30bps to 40.4%.
Services PMI for September came in at 49.8 against 41.8 in August, improved for the fifth consecutive month. Composite PMI for September was 54.6 against 46 in August. A number below 50 indicates contraction in business activity.
Majesco Li to consider a buyback proposal for buyback of fully paid-up equity shares of the company in its Board of Directors meeting scheduled on October 8. The stock locked in the upper circuit of 5%