How are the Markets Looking ?

The Nifty took a dip down to 21,333 but then reversed by more than 100 points, eventually closing again very near the all-time high. It’s clear evidence of the extreme strength the market is currently exhibiting.

A lot of folks have been calling out for corrections, some saying it’s getting irrational, but I believe one should not doubt the market’s momentum until there are clear signs of it fading. And right now, there’s no indication of that. We’ve seen numerous instances in the past where markets have continued to rally despite various valuation calls, and it’s natural for markets to have lumpy returns.

So, maybe the markets will go up enough that they essentially discount for the next couple of years of returns, and then we may have a sluggish period of six to eight months at some point, which we also saw in financial 2021. Other markets, like gold and real estate, also do this periodically, where the rise happens unexpectedly, and markets always rise on walls of worry.

There has always been talk of a recession this year globally, and yet the markets have been rising. We did a small video on how the US markets are also rising in the entirety of 2023 despite so many calls from the best advisors and forecasters for a recession in the US. So, markets always have a mind of their own. You should follow the market, not try to predict it because the market will sooner or later trip you on the wrong foot.

Nifty Heatmap

The internals of the market were still mixed, I would say, despite the comeback. ICICI Bank was down, whereas SBI was up. Then you had Coal India perform really well, up 5.5%. Nestle jumped up 4.6%, Tata Consumers up 1.7%. So FMCG as a whole had a great day. ITC also gaining along with Levers. NTPC went up 2.1%, Cipla up 1.6%, Sun Pharma, Adani Ports, Adani Enterprise, Maruti, Mahindra – these were the ones that lost a little bit of ground.

Sectoral Overview

Energy stocks remained in the forefront, up 1.6%. FMCG, slightly behind at 1.4%. But for FMCG, a 1.4% rally in a single day is a huge one. PSU banks, up 0.8% on back of SBI. Public Sector Enterprise continue to run, several rail stocks running. Several commodities like HindCopper are running. Consumption stocks also running. Infra Pharma also in the green. Private Banking down 0.1%, real estate down 0.5%, metals autos and IT also down 0.7-1%.

Mid & Small Cap Performance

Mid-caps have remained flat for the last three sessions, which is understandable after the humongous rally we’ve had. Small caps, however, are inching up every day. There’s been some profit-taking, but overall, small caps are doing well.

Bank Nifty Overview

Nifty Bank, again, two days of minor correction, but we are still within the main candle of Friday. So this is a profit-taking and very likely that we will take off again soon on Nifty Bank.

Highlight – IT

Nifty IT, which had really run up in the last four sessions, had a sort of a doji bar in the previous session and today it was a down day. Still, I would say that this is very much intact in trend and this is normal at par, sort of a correction after a move of this nature.

Highlight – FMCG

FMCG, after consolidating for many sessions, is breaking out. So FMCG at a new high at 54,776. The index, all is looking good here, I think, led by Nestle, and there is rotation with Levers, ITC, and other stocks.

Highlight – Energy

Nifty Energy is the one that is just not stopping. There is an energy chart that I showed on Twitter today where the energy consumption on a per capita basis in some states is still far behind and a lot of demand for energy is going to continue for the next decade and beyond. So energy stocks are looking very good despite whatever the fundamental thesis or the story may be.

Highlight – Great Eastern Shipping

Great Eastern Shipping, a great move from 860 to a 1000 rs, there is trouble in the Panama and Suisse Canal and a lot of supply chain issues with tankers and ships. Shipping costs would increase and hence GES would go up. This is like a six sigma event that has happened unexpectedly.

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