Today’s market movement was beyond anyone’s expectations. Most people thought we were just buying time with the Nifty consolidating and waiting for a trigger to move up. However, the market decided otherwise, with the Nifty soaring like a rocket, reaching a new high with a 400-point move.
We’ll delve into the main story at the end of the blog : is casino gambling more rewarding than trading?
Market Overview
Where is the market headed? So, Nifty is very, very clear. As I’ve been mentioning over the last day or two, Nifty is not signaling any kind of weakness. Even post the budget day, the two days were, one a flat day, the other a gap down and build up back to where it was. There was no give up happening, and that was an indication that Nifty at least is not willing to give up at this level, which is very, very good news.
The support that we drew yesterday was held, and Nifty has closed at 24,834, a new all-time high. This 400-point move has come out beyond anybody’s expectation, 428 points on the trot. This has really butchered all the bears who were waiting for this support to break and potentially at least get till here, if not till election day high. So, all hopes belied for the short community, but longs are enjoying. I think today’s FII figure should also confirm a big buying from there.
There is talk of a few rating agencies upping India’s rating, so that could have contributed to this very consistent rise through the day, which was not expected or matched by other parts of the market.
Nifty Next 50
While the Nifty junior showed respectable gains of 1.65%, it didn’t match the Nifty’s steady rise.
Nifty Mid and Small Cap
Mid-caps showed respectable gains of 1.7% but didn’t match the Nifty’s steady rise. Small caps showed muted enthusiasm with a 0.9% rise
This highlights the unpredictable nature of markets, which can remain elevated or undervalued longer than one might expect. The key takeaway is not to try to predict the market but to listen to what it is telling you.
Nifty Bank Overview
Bank Nifty faced challenges with news of RBI tweaking liquidity ratio requirements, affecting banks. Despite these challenges, Bank Nifty rebounded with a bullish engulfing candle, indicating a potential recovery.
Nifty Heatmap
Today’s heat maps were overwhelmingly green, with significant gains across various sectors. ONGC and Tata consumers were among the few that showed slight declines, but overall, it was a positive day with stocks like Bharti Airtel, ITC, and Infosys leading the charge.
Sectoral Overview
Sectoral data also painted a healthy picture with metals, autos, pharma, IT, and infra sectors all showing strong gains.
On a weekly basis, most sectors have recovered from recent falls, with only private banking, real estate, and PSU banks lagging. All-time highs should not be feared; they indicate potential for further growth. Metals, which had lagged since the election day, are now gaining momentum, and autos have shown a significant 10% increase since then.
Sectors of the Day
Nifty Metal Index
Nifty Auto Index
Stocks of the Day
New India Assurance
Insurance companies, particularly New India Assurance, have performed well, benefiting from recent budgetary measures. This company has seen a fourfold increase in value over the past two years, demonstrating the potential for recovery and growth in seemingly stagnant stocks.
Story of the Day : Is Casino Gambling more rewarding than Trading?
SEBI’s analysis of the cash market reveals some stark findings. One in three individuals trading in the equity cash segment engages in intraday trading, a surprisingly high proportion. The share of young intraday traders (under 30) has grown significantly, from 18% in FY19 to 48% in the last year. This trend indicates a growing attraction among youth towards quick profits, often to their detriment.
SEBI’s data shows that seven out of ten intraday traders incurred net losses in FY23. This is slightly better than the FNO market, where 89% of traders were losing money, but still a concerning statistic. The proportion of loss-makers increases to 80% among those who trade more frequently, and younger traders (under 30) have a 76% loss rate.
Interestingly, the bottom 78% of traders, sorted by turnover, account for less than 1% of the total intraday turnover. In contrast, the top 6% of traders account for more than 90% of the turnover. Despite this, 76% of traders with an annual turnover of over one crore were also loss makers. This indicates that even high-volume traders are not immune to losses.
The cost of trading exacerbates losses, with loss makers seeing their losses increase by 57% due to trading costs, while profit makers incurred 19% of their profits as trading costs. This highlights the significant impact of trading costs on overall profitability.
A comparison between casino gambling and day trading shows that 13 out of 100 gamblers leave the casino as winners, whereas only one out of 100 day traders reliably beats the market over the long term. This stark comparison underscores the challenges of day trading and the potential for significant losses.
Trading should be approached with the seriousness of a profession, requiring a proper plan, capital allocation, and a disciplined approach. Treating it as a part-time hobby or a means of quick profit can lead to financial ruin. Developing a trading plan, maintaining a journal, seeking mentorship, and continually learning are essential for success. It is crucial to respect the market, follow tested rules, and avoid impulsive decisions.
Trading is not for everyone, and it is okay to step aside if it doesn’t align with your strengths. Focus on what you do best, whether it is your career or other investments. For those committed to trading, treat it with the same dedication and professionalism as any other business. Execute your plan consistently and don’t get swayed by the allure of quick gains.
