Nifty Slips 6% During the Week!! WHY??

Nifty Slips 6% During the Week!! 

&

Vista Equity Partners to Invest Rs 11,367 crore in Jio.

Weekly Action

Nifty, -6.2%; Sensex, -6.2%; Nifty Midcap, -5.3%; Nifty Smallcap, -4.1%;

Weekly Market Review

Weakness in the market persisted for the most part of the week. On Monday, Nifty staged a downside reversal and broke below its 50-DMA (9,778). On Tuesday, Nifty opened more than a per cent higher but failed to hold gains and the selling pressure intensified as the day progressed. As the loss percentage and volume threshold met our criteria, Tuesday’s session was considered as a distribution day. Nifty attempted to move higher in the latter part of the week but was not able to progress notably and oscillated around 9,200. Barring Nifty Pharma, all sectoral indices closed in the red. Nifty Auto, Bank, Financial Services, and Metal closed with a loss of 8–10% each.

Few actions in the last week indicate little technical damage:

1) Monday’s sharp selloff and Nifty breaching its 50-DMA

2) Undercutting low of two additional follow-through days observed during last week.

3) Failing to hold opening gains and closing in the lower half of day’s range in four out of five sessions and addition of a distribution day on Tuesday.

However, we remain in a Confirmed Uptrend and are open to increasing risk selectively in quality names coming out of proper bases. But, if we see Nifty add more distribution days, break its 21-DMA (9,192), and begin to see leaders falter at support, we will likely shift the market status to an Uptrend Under Pressure. The beauty of our CAN SLIM method is that we need not "expect," "hope," or "wish for" with respect to market action. We will take what the market gives us and continue to monitor unfolding conditions.

We always look for stocks with strong relative strength. But investors should understand that it is not prudent to blindly buy stocks that have a high relative strength simply because they have been performing well. This is the essence of momentum investing, and it can get you into trouble. Rather, one should base buying decisions on sound fundamental and technical analysis. Only invest in stocks that have strong fundamentals (i.e., good sales, earnings, margins, etc.) and that are breaking out of sound base structures on heavy volume.

Key News

Reliance Industries announced that Vista Equity Partners will invest Rs 11,367 crore into Jio Platforms. This investment values Jio Platforms at an equity value of Rs 4.91 lakh crore. Jio Platforms has now raised Rs 60,596.37 crore from leading technology investors in less than three weeks. The stock closed 3.6% higher.

Dr Reddys Labs. (Nse) received the Establishment Inspection Report from the USFDA for its API manufacturing plant at Srikakulam, Andhra Pradesh (CTO VI). The stock closed 3.8% higher.

Sbi Cards And Payment Services reported Q4 FY20 results during market hours. PAT was Rs 83.5 crore versus Rs 249 crore y/y. Revenue increased 21% y/y to Rs 2,510 crore. Gross NPA was down to 2.01% versus 2.44% in Q4 FY19. The stock closed 2% lower.

Thank you !