Where is the market headed?

Markets opened on a positive note today, but global factors soon took a toll. Rising yields across the globe — whether in the U.S. or Japan — are unsettling investors. These macroeconomic tremors are being compounded by geopolitical concerns: reports indicate Pakistan may be fast-tracking the purchase of jets from China at a discount, while India is looking to acquire additional S-400 missile systems from Russia. Such developments are not sitting well with the markets.

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Market Overview

Over the past 4–5 sessions, Nifty has shown sluggish performance. While there were deeper cuts intraday today, the index managed to recover half a percent and closed at -0.82%. If we view this in context — since early April, Nifty climbed from around 21,000 to near 25,000 — a correction of 1,500 points is not unusual. Even a dip to 24,000 would still be within a healthy market range.

Nifty Next 50

Nifty Junior, in contrast, saw milder losses, closing at -0.33%. This reflects more distress in large caps compared to broader markets.

Nifty Mid and Small Cap

Midcaps were down just -0.37%, and small caps were resilient — they didn’t fall at all. This strength is reminiscent of the bullish phase pre-October, when small caps were rallying daily. Even on down days now, they’re holding up firmly.

Bank Nifty

Nifty Bank was down just -0.24% but bounced back smartly from the lows, maintaining its bullish flag formation.

GOLD

Gold was up 0.25%. It continues to follow a trendline, and if that breakout happens, the yellow metal could surge further. It’s likely that gold will be hard to stop in the coming years.

Advance Decline Ratio

The advance-decline ratio was largely flat: 200 advances vs. 296 declines. The tone remained consistent from open to close.

Heat Maps

The Nifty heatmap painted a mostly red picture:

FMCG stocks were notably weak: ITC, Hindustan Unilever, etc.

Reliance dipped.

Power stocks slid.

Banks remained relatively flat.

On the Nifty Next chart:

• Gainers included Zydus Lifesciences, HAL, Indigo, United Spirits, and GAIL.
• Losers included DMart, Hindustan Aeronautics, Torrent Pharma, PFC, and PNB.

Sectoral Overview

Winners included: Defense: +2%, Media: +1.1%. Losers included: Capital Markets: -1.5%, FMCG, IT, CPSE, Oil & Gas: Down over 1%.

Weekly Sector Performance:

• Defense: +7.4%
• Real Estate: +4%
• Capital Markets: +1.8%

Laggards:

• FMCG
• IT
• Consumption
• Infrastructure

A point of interest in the capital market space: SEBI is yet to decide whether NSE will be allowed Tuesday expiries. If permitted, it could draw volume away from BSE — a heavy weight in the capital market index — explaining some of the selling pressure. Meanwhile, BSE goes ex-bonus (2:1) tomorrow, adding more volatility to the mix.

Sector of the Day

Nifty India Defence

The defense sector is on fire:

Mazagon Dock: +2.5%

Garden Rach Ship: +10%

Solar Industries: +6%

Cochin Shipyard: +3.8%

Paras Defense: +2.6%

Nifty FMCG

FMCG’s slump is concerning. Colgate was down 6% today, Varun Beverages by 2%, United Breweries by nearly 2%, with Marico and ITC also sliding.

FMCG’s performance often reflects rural demand. If FMCG is struggling, it could mean trouble for broader economic consumption patterns.

Story of the Day: Don’t Take Markets for Granted: A Reality Check for Investors

Let’s zoom out and talk long-term. Here’s a three-monthly chart of Indian markets over 25 years. With exceptions like the Global Financial Crisis and COVID, the journey looks smooth. From 2000 to now, Nifty has risen about 25 times — a dream run.

But what about the next 25 years? Can we assume similar returns?

On a log chart, projecting forward suggests Nifty could reach 300,000 by 2047–2050. That’s the SIP calculator dream. But should we take it for granted? Let’s look at history — from other nations.

Global Market Lessons

China
Despite strong GDP growth, its stock market has been stagnant for 17 years. From 2006–2023, no meaningful upward move.

Japan
From 1965–1989, the Nikkei surged 40x. Since then? It’s been flat for 35 years. Even today, it’s just recovering those past highs.

USA
The S&P 500 peaked in 2000 and didn’t break that high until 2013. For 13 years, it went nowhere and had two major crashes.

UK
Peaked in 2000. Only by 2022 did it break past those levels — 22 years of stagnation.

India, on the other hand, has mostly seen short, sharp corrections. The only prolonged lull came post the Harshad Mehta era (1992–2003). Since 2003, however, it’s been a fairly consistent uptrend.

But just like China, even strong economies can face market stagnation.

Gold: Your Best Plan B?

What if Indian markets enter a long period of flat returns? History teaches us that gold has been the savior in such scenarios:

• Japan (35 years): Gold rose 700%

• China (17 years): Gold rose 300%

• USA (13 years): Gold surged 500%

• UK (22 years): Gold up 500%

In each case, a balanced portfolio with even 20–40% gold would have offset equity losses and delivered solid returns. When equity fails, gold shines.

Is your portfolio prepared for a long flat phase? Let us know in the comments if this resonated with you. Thank you for reading. See you in the next update.

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