The WeekendInvesting Newsletter
Another superb initiative from our Research Desk is The WeekendInvesting Newsletter. This is a daily newsletter that summarizes all the stories we cover during the day(market nuggets), including the daily byte that we shoot every evening. This newsletter will be delivered to your email every evening on market days, providing you with a wealth of market-related information. The newsletter includes both summaries and long-form blogs for all the market nuggets covered. These blogs are also linked to the videos we shoot, so you can choose to watch or read the content according to your preference.
Check out our past newsletters.
Nifty on the Daily Chart – 50 & 200 DMA Perspective
The Finance Minister has presented a blockbuster, consumption-driven budget. Market participants were bracing for potential tax hikes, an increase in capital gains tax duration, and other changes, but none of that materialized. Instead, taxes remained untouched for most, and lower and middle-class taxpayers received significant relief. Even those in higher tax brackets under the new regime benefited slightly.
The budget has maintained fiscal discipline while putting more money into people’s hands, fueling consumption. Some estimates suggest that the changes will inject nearly ₹3 lakh crore into the economy, a massive boost in any year. While the exact figure is debatable, the overall impact on consumption is undeniable.
Despite the positive budget, markets didn’t rally as much as they could have. This was likely due to global concerns, particularly President Trump’s new tariffs on Mexico, Canada, and China, which could trigger volatility worldwide. Had these external factors not been in play, the Indian market might have seen a 3–4% rally. The next test will come on Monday when global markets react. However, given the strong domestic backdrop, India might weather external turbulence better than expected.
Looking at the Nifty daily chart, the index has rebounded sharply, gaining 600–700 points in just a few sessions. More importantly, it has closed above a key resistance level, signaling that previous weaknesses are being absorbed. When the market surpasses a major down candle, it often means that many trapped sellers are exiting, allowing for a stronger base.
This doesn’t guarantee an immediate rally; a retest of lower levels is still possible. However, the strength of downward moves appears to be fading. The next challenge is breaking above the 200-day moving average at 24,000. It won’t be easy, but even consolidating around current levels in February would be a positive outcome.
Looking ahead, the next quarter could see the start of a more sustained uptrend. Market moves always anticipate economic changes, and with increased disposable income from the budget, consumption-driven sectors are already showing strength. Stocks often react ahead of actual economic activity, meaning that many of these companies could rally long before the impact of higher spending materializes in financial reports.
Nifty – Weekly Perspective
Nifty gained 1.69% this week, a much-needed relief. The weekly chart highlights another critical point: the breakdown level from November’s second week has been recovered. While previous recoveries have failed, this remains a strong technical sign.
A bullish engulfing pattern has emerged, further indicating potential strength. Though external risks remain, domestically, the technical structure has improved, increasing the likelihood of stability or upward movement in the coming weeks.
S&P 500 Overview
The S&P 500 ended the week down by 1%, but it remains near record highs. The U.S. market’s resilience contrasts sharply with the recent turbulence in emerging markets.
GOLD Overview
Meanwhile, gold continues its stunning rally, crossing ₹82,000 per 10 grams in India. Just a year ago, gold was at ₹56,800, meaning it has surged nearly 45% in 12 months. Many investors overlook gold due to Warren Buffett’s famous criticism of it being a “Pet Rock,” but the data speaks for itself. Gold has provided equity-like returns with much lower volatility and serves as an excellent hedge against market downturns.
For investors who don’t hold gold in their portfolios, this rally should be a wake-up call. Historical trends suggest that gold maintains an inverse correlation with equities, making it an essential component of a balanced portfolio.
Dollar Index Overview
One of the biggest concerns remains the strength of the U.S. dollar. The dollar index, which had pulled back briefly, has rebounded and is now moving higher. This is bad news for emerging markets, as a stronger dollar leads to continued FII outflows from countries like India.
President Trump has been actively making economic announcements, including taking a strong stance against the BRICS nations’ discussions about an alternative currency. These geopolitical tensions could continue influencing global liquidity and investment flows.
If the dollar index remains elevated, FII selling may persist. However, if it reverses, emerging markets like India could see renewed inflows, stabilizing the markets.
Benchmark Indices Overview
This week, Nifty gained 1.69%, Nifty Next 50 rose 1.6%, and Nifty 500 was up 1.2%. However, midcaps and small caps remained weak, with midcaps up just 0.3% and small caps slightly negative at -0.3%.
Over the past month, small caps have dropped nearly 11%, and the Nifty Next 50 has fallen about 7%. In contrast, Nifty itself has remained relatively stable.
Looking at a one-year perspective, markets are still in the green—small caps (+6%), Nifty 50 (+8%), midcaps (+11%), and Nifty Next 50 (+14%). The Nifty Next 50 has been a standout performer in the large-cap space, outpacing both small and midcaps.
From a three-year CAGR standpoint, Nifty is at 10%, which is slightly below its historical average. Midcaps and small caps are somewhat above their long-term averages, hovering around 15–17% CAGR. Over five years, small caps have delivered nearly 26% CAGR, which is exceptionally strong. While valuations are above long-term averages, they are not in a danger zone.
The market seems to be approaching a point where supply and demand will balance, potentially creating a floor for the next leg up.
Sectoral Overview
This week, real estate stocks delivered a stellar comeback, surging 11.6%. Consumption stocks (+5.4%), autos (+5%), and FMCG (+4.2%) also performed well. The tourism sector gained 4.3%, reflecting improved sentiment.
On the downside, capital market stocks like CDSL, CAMS, and Nuvama took a breather. IT stocks dropped by 3.4%, and pharma declined 2.5%.
For the past month, capital market stocks have been the worst performers, down nearly 15%. Media, pharma, and real estate stocks have also struggled, falling around 8.5%. Investors looking for value might find opportunities in these beaten-down sectors, while those chasing momentum should focus on FMCG and auto stocks, which are relatively stronger.
Analyzing different timeframes—weekly, monthly, three-month, six-month, and one-year trends—reveals that consumption stocks are leading across the board. Autos, tourism, financial services, and FMCG remain strong sectors.
On the other hand, public sector enterprises, oil & gas, metals, and PSU banks have consistently underperformed. Media and energy stocks are also lagging.
In the very short term, real estate has bounced back sharply, while IT has taken a hit. Sectoral momentum continues to shift, making it crucial for investors to stay flexible and adapt to evolving trends.
Rebalance Update
We give advance notice here on the upcoming changes in your smallcase for Monday. This advance notice can be used to ignore Monday’s update if there is no change. If there is a change indicated you can use the smallcase app or log in to weekendinvesting.smallcase.com to see the rebalance.
Note: We are not including LIQUIDBEES as an ADD or an EXIT count.
WeekendInvesting Products – LIVE Index Data
Many of you had asked us to make the index series of all WeekendInvesting Products available so that you could perform your own analysis and studies. You can find a link to the LIVE sheet here and also on the HUB under the support column in the content tab.
