Welcome to the Weekend Investing Daily Bite for the 24th of March. March is turning out to be a great month! We’ve now erased all the losses from the 2025 calendar year, which is absolutely amazing. Just a week ago, nobody was expecting this turnaround, and yet, here we are.

Today’s topic is about currencies and how falling currencies can severely impact any economy. We’ll take an example from Turkey to understand the effects this can have on the stock market and other investments. We’ll also explore whether a crisis like this could ever happen in India, and if so, how we can prepare for it.

Where is the market headed?

Market Overview

Let’s take a look at the market data. As you can see, the market has been on a remarkable rise for six consecutive days, which is quite rare. Usually, we see moves of four or five days, but six days in a row is something unusual. We are now very close to the peak we saw earlier at 23,800. I suspect that we may cross that level tomorrow and perhaps consolidate there. The pace at which the market has surged has surprised many, and that’s what typically happens during a market turnaround.

When the market falls after a long bull run, people are often hesitant to believe it’s a downtrend. Likewise, when the market starts to rise again after a bear phase, most people are unwilling to believe it’s a genuine uptrend. While it’s still unclear whether this is a sustainable rally, it’s large enough to indicate that there are buyers at lower levels, making it difficult for the market to drop below recent lows.

In just a couple of weeks since the beginning of March, many investors who sold off in January and February are now left wondering whether they should re-enter the market, whether they’ve missed the boat, or if the market will give them a second chance. This indecisiveness is common among those without a structured investment plan, and it’s something that can lead to unnecessary confusion. True investment success comes when you can avoid this trap of indecision, because until you do, you’ll find yourself constantly throwing darts and either making the wrong or uncertain choices.

Nifty Next 50

The Nifty Junior was up 1.24%, showing an incredible rally from 56,500 to 63,600 in a very short time.

Nifty Mid and Small Cap

Mid-caps rose by 1.12%, and small caps gained 0.98%. After a recent surge, small caps showed some signs of fatigue, so a small rest may be expected, but this won’t harm the market overall.

Nifty Bank Overview

The Bank Nifty has been on fire. It broke above a key pivot from the February high and is now making higher highs. Investors are looking for potential pullbacks to get back in. Bank Nifty has been outperforming since mid-January, hardly touching previous lows and returning to October levels. From the top, it’s now only down by about 5%, with several banks even hitting new all-time highs.

GOLD

Gold, on the other hand, is down by 0.37%, but with the equity market on the rise, no one’s complaining. Gold has always acted as a safe-haven asset when the equity market drops, and while the market is booming now, it’s expected that gold will step in once another crisis hits.

Advance Decline Ratio

The market breadth is quite decent with a 363-137 advanced-to-decline ratio in the CNX 500 stocks, which aligns with recent trends

Heat Maps

Most stocks are in the green, with notable performances from Kotak Bank (+4.5%), State Bank of India (+3.5%), HDFC Bank (+1.5%), and Reliance (+2%) after news of its AI alliance with Meta. Other strong performers included L&T, NTPC, Power Grid, and several auto stocks.

Sectoral Overview

In sectoral trends, the defense sector is seeing explosive growth, with missile stocks up 3.4% for the day, 14% for the week, and 21% for the month. Capital markets are also showing strong gains, up 13.6% this week and 41% year-to-date. Real estate stocks are up 1.5% for the day and 10% for the week, while consumption stocks have remained somewhat subdued.

Sectors of the Day

Nifty IND Defence Index

Story of the Day – Can a crisis like the one in Turkey happen in India?

To understand this, we will look at the Turkish currency crisis. The Turkish Lira has been volatile for decades, experiencing significant depreciation. Recently, the Lira dropped dramatically from 36 to 41 Lira to the US Dollar within a single day—an almost 12% move. Imagine if the USD/INR pair moved from 85 to 95 in a single day! This would send shockwaves through the market.

The Turkish stock market also saw a significant drop of 15% in just three sessions. If something similar happened to India’s Nifty, it would be a catastrophic 4,000-point drop.

The History of Turkey’s Currency Crisis
Turkey has faced currency crises several times, with major events in 2018 and 2021. In 2021, the Turkish President cut interest rates despite rising inflation, leading to a sharp depreciation of the Lira. The Lira went from 8 to nearly 17 to the dollar in just four months—an equivalent of the Indian Rupee going from 85 to 170 in a similar time frame.

During these crises, gold proved to be a major safe haven. As the Lira collapsed, gold prices skyrocketed. In the recent downturn, the Turkish Lira lost 6%, while gold surged by 14%. Over the past years, gold in Turkey has consistently outperformed the stock market and the Lira, especially in times of crisis.

How Does This Relate to India?
Could a similar currency crisis happen in India? While it’s unlikely, it’s still a question worth considering. India is fortunate to have strong leadership and a relatively stable political environment. But as we know, the future is uncertain. The political landscape can change, and economic policies may shift, which could lead to instability.

In the face of such instability, having global assets—such as gold, overseas stocks, or real estate—can protect your wealth. These assets are not tied to the local currency and can preserve your purchasing power in case of a currency collapse.

The Role of Gold in a Crisis
Gold has proven time and again to be a hedge against currency and economic crises. It has consistently protected investors during times of turmoil, such as during the 2008 Global Financial Crisis, the 2011 Eurozone crisis, and the 2020 pandemic. Historically, gold has performed well in India during periods of political or economic uncertainty.

While equity markets may fluctuate, gold acts as a safeguard against the erosion of wealth. If a crisis like Turkey’s were to happen, having a portion of your portfolio in gold would shield your purchasing power.

Conclusion
While India is not immune to political or economic uncertainty, we can take steps to protect ourselves. Diversifying into global assets, particularly gold, is a prudent strategy to ensure that your wealth remains intact, even in the worst-case scenario. While we hope that such a crisis never occurs, being prepared is the best defense.

If you found this analysis of Turkey’s crisis insightful, please share your thoughts and takeaways in the comments below. Don’t forget to like, share, and subscribe to the channel. Thank you for watching!

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