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
Nifty is currently at a very precarious edge. Over the last six sessions, the index has repeatedly touched the 22,800 level without breaking below it. A major catalyst could be a US market decline—as we saw last night—potentially triggering further falls in the Indian market. However, at present, the market appears unwilling to drop any further. That said, it is difficult to say when the bottom will be reached; such turning points are usually marked by either a sharp capitulation or a sudden up move that propels the market higher. The reduced range and lower volatility in the past four to six sessions indicate that while the market is teetering on the edge, it has not yet toppled over.
There is also a possibility that if the US market falls, we might see some initial decline in India, but I believe that the correlation between the US and Indian markets has weakened over the past four months. As funds exit the US, they may shift to other markets, potentially forming a base here. With US markets now nearing maturity and showing signs of an expected pullback amid changing global rules and rising inflation driven by tariff talks, domestic consumers might also feel the impact.
Nifty – Weekly Perspective
On the weekly chart, Nifty remains indecisive, as indicated by a doji candle. This leg of decline has stretched nearly three months, and typically, after such a prolonged fall, a rally lasting about a month can be expected. That potential rally would help create an intermediate bottom, but the current narrative remains bleak and does little to inspire confidence.
S&P 500 Overview
The US market, which has been performing strongly and is still closing at record highs, now appears to be plateauing. It has been on a relentless tear since October 19, 2023, and if it breaks a key pivot, some funds might start to leave the US market. Such a shift would relieve some of the pressure on Indian markets, especially as it would reduce FII selling.
GOLD Overview
Meanwhile, gold has risen another 1.74% this week, closing at 86,16. Gold and US markets have performed exceptionally well since October 2023; while the Indian market was strong until around October 24, it has since faltered. In contrast, gold has jumped by 50 to 60%—a level that, if it constituted a significant part of your portfolio, would have done wonders. Many gold-hedged portfolios are now virtually loss-free.
Dollar Index Overview
The dollar index is beginning to cool off, down by 0.11%, which is positive news for emerging markets and precious metals. A further decline in the dollar index could also ease the pressure on the Indian rupee, providing much-needed respite.
Benchmark Indices Overview
Looking at benchmark indices over the past week, there have been minor gains in mid caps, Nifty Next 50, and Nifty small caps, but overall, the broader market has only seen a 0.28% gain. Over the last month, Nifty has actually been negative, and all indices remain in negative territory. For example, small caps are down almost 11% over the last three months, while in the last six months, Nifty Next 50 and Nifty small caps have fallen by 18% and Nifty 50 by 8%.
Over the past year, small caps are down by 2%, Nifty 500 by 2%, Nifty by 3%, Nifty Next 50 by 3.5%, and mid caps by 4%. Mid caps have performed the best over the last year, and although the market looks quite healthy over longer periods—with double-digit gains over three years and Nifty up about 10% CAGR—the three-year returns on Nifty are now below the long-term historical average. This suggests that further downside pressure on Nifty may be limited.
Sectoral Overview
Within Nifty sectors, the capital market segment has suffered the most, falling by 9.6%, with real estate close behind at 9.4%. Other sectors, including defense, media, central public sector enterprises, energy, tourism, oil and gas, and autos, have all dropped by 6% or more, with the remaining sectors falling between 1% and 6%. There were no sectors that posted gains this week.
Over the past month, private banking and financial services have at least stabilized, and over the three-month period, these sectors have shown relative strength compared to public sector enterprises, real estate, energy, defense, and capital markets, which have all lost significant ground over the past year. While some sectors like capital markets and defense remain in the green, others such as energy, oil and gas, and PSU stocks are deeply in the red.
When examining the sectoral momentum overview over various timeframes—one week, one month, three months, six months, and one year—it is clear that financial services, private banks, the services sector, and banking, along with IT, have consistently maintained their momentum. In contrast, sectors such as energy, public sector enterprises, real estate, oil and gas, and defense are losing momentum significantly.
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.
