Markets at days high; penny stocks continue to shine! Tree House, Sintex, GTL Infra touch upper circuit limit

Karan Dsij
Markets at days high; penny stocks continue to shine! Tree House, Sintex, GTL Infra touch upper circuit limit

Market Update at 12:30 PM:Indian markets were seen trading near the day’s high on Wednesday with Nifty and Sensex gaining more than half a per cent, aided by a strong move in the index pivotal, Reliance Industries and Infosys. 

Reliance Industries and Infosys have combinedly added 49 points to Nifty’s kitty. The broader markets are also witnessing buying interest as Nifty Midcap 100 and Smallcap 100 were up by 0.39 per cent and 0.44 per cent, respectively.   

Among the sectoral indices, barring Nifty FMCG and Nifty Realty, all other sectoral indices were in the green. Besides, Nifty IT and Nifty PSU Bank also gained 1.1 per cent and 0.93 per cent, respectively.

Interestingly, penny stocks continued to witness interest in the stock market as nearly 186 stocks hit a fresh 52-week high. On the flip side, only 3 stocks hit a new 52-week low. Penny stocks such as Tree House, Sintex, GTL Infra, and many more touched their respective upper circuit limits today. 

After opening on a flat to negative note, Nifty turned decisively lower on Tuesday. As a result, it extended its fall for the second consecutive day. Overall, action in the broader market was also weak as Nifty Midcap 100 and Nifty Smallcap 100 ended down by 0.50 per cent and 0.14 per cent, respectively.  

Nifty Pharma and Nifty FMCG indices went up by 0.58 per cent and 0.50 per cent, respectively. All the other sectoral indices were down due to selling pressure. The metal index was down by 1.22 per cent while Bank Nifty and auto indices declined by 0.99 per cent and 0.91 per cent, respectively. The market breadth turned negative with 1,045 declines and 884 advances.  

The price action of the day formed a bearish candle on the daily chart; as a result, there was a formation of back-to-back bearish candles. The index closed below the two-day low with a negative breadth, which indicates that the bulls are losing their control. Also, the volume on Tuesday was higher compared to Monday’s session and the fall was greater than 0.25 per cent, which led to a distribution day! Furthermore, the index closed at the support of 20-DMA for. A close below the 20-DMA (15,742) would be the first confirmed sign of bearish implications. As Bollinger Bands are narrowing, expect a volatility expansion soon.   

Also, after May 14, Nifty has not closed in red for three consecutive days. Since the index ended lower for the second consecutive day on Tuesday and if it closes below the level of 15,742 on Wednesday, it will close in red for the third day in a row. Also, it would close below its 20-DMA.    

The RSI closed below the prior swing low, which is indicating weakness. It is also moving in a downward channel. The MACD histogram shows an increased bearish momentum. The negative directional indicator i.e. -DMI further raised and the ADX declined to below 14, which is also an indication of weaker strength in the trend. The VIX, which declined another 2.98 per cent to 13.0025, is a very dangerous signal evolving in the market. Historical lower volatility may result in sharp price movements. On a 75-minute chart, Nifty closed below the MA ribbon along with the MACD line, which is below the zero lines. 

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