Where is the market headed?

Monday started as a bloody day and a bloody week, and the entire market was looking very, very weak. Of course, while it sounded like a joke a few days back that every time Putin visits India, the Indian market falls, once again we have seen the same thing playing out.

The average fall from the 52-week high now for small-cap stocks is 27%. So, the average small-cap stock is down 27%. Out of 250 stocks in the small-cap index, we have 201 stocks that have fallen more than 15%, some as high as 65% to 67%.

There is a sense of fear in the market, especially in the micro-cap and the small-cap space. We will talk more about this at the end where we will cover one more interesting tweet, so you can stay tuned for the rest of the video.

Market Overview

Nifty completely erased what we gained in the last two sessions, down 0.86%. The move that had started on Friday certainly has been negated in a big way. So, the rate cut that was done and the move that ensued after that have been nullified completely.

Nifty Next 50

In the Nifty Junior, you can see a very sharp cut where a complete rounding top pattern has been made. And the sharp sell-off that we had in September, we are again at the bottom of the same point, at minus 2.05% here. Going forward, perhaps we will retest this bottom and see if we are going down.

Nifty Mid and Small Cap

Mid-caps also lost significant space. For the last two and a half months, we were having a slightly upward trend, you can say, and now that has been smashed down at minus 1.7%. Some support may come through at this level, but the way markets were thrashed today, there can be some more downsides also, and small caps are showing you that downside, where the previous low was not only broken but convincingly much below that, at 2.27% for the small-cap space.

Bank Nifty

Bank Nifty also lost the last day’s gain, so we are back where we were on Thursday, at 0.9% down.

GOLD

Gold is flat at 12,918 per gram with a 0.46% minor gain, and silver is actually again nearing its all-time high close on the daily basis at 0.71%. Almost 1,80,000 per kg is the price there.

SILVER

Advance Decline Ratio

The advance-decline trends are quite, you can say, abysmal, where the declines started very high and they continued to go higher through the day. So, there was no point at which there was a fightback against this fall. The sell-off was so sharp, so only 31 advances in 500 stocks. That tells you the breadth of the move. I think it is also signaling that maybe the market has given up on the optimism of the US trade deal. Although there were some rumors yesterday that the trade deal is back on the table, Post-Putin’s visit, that also seems to be behind the expected outcome.

Heat Maps

Nothing was spared today, whether it was banking, Autos, or FMCG. The significant losses were foreseen in JSW Steel, Bharat Electronics, IndiGo (of course, 8.2%), Bajaj Finance, and State Bank of India also not getting spared.

Nifty Next 50 was even more red, where 2% to 4% is sort of the norm for most stocks. HAL lost 3.5%, and Vedanta 2.5%.

So, this is looking like some sort of a big liquidation that has happened. Normally, when such a bigger move comes, it is not a single day move. It is usually lumped with a few days of such moves and then, of course, some consolidation. So, it will be surprising if we just have today’s down move and the rest of the days of the week become a non-continuation of this. We may get some breather after this move, but the force of this move sort of suggests that there is more to come.

Mover Of The Day

The mover of the day is Kaynes Technology. Kaynes Tech is down 26% in just three days. The stock was nearly 8,000 rupees not so far back, and we are at 3,800. So, it tells you the importance of having some exit plan at some point because you really can’t say when it can come and hit your stock.

Sectoral Overview

Looking at the down move in the sectoral trends, no sector was able to make any gains. Only Nifty IT managed a 0.29% fall, which was the best performer amongst all sectors. Nifty Financial Services, Oil and Gas, and Private Banks were all down 1% or more. Infrastructure, Auto, FMCG, and Pharma fell 1% to 1.5%. Energy, Capital Markets, MNC Manufacturing Index, and Consumption were down 1.5% to 2%. And you have Metals, Public Sector Enterprise, CPSE, PSU Banks, Tourism, Real Estate, Retail, and Defence getting really badly hit, 2% to 3.5% and even more, 3.68% on the defence sector.

Sector of the Day

Nifty Realty Index

Godrej Properties, Anant Raj, Prestige, DLF, and Sobha have let the real estate down. It was looking like a nice support here to take off from here post the interest rate cut, but it seems that the interest rate cut has just come and gone, and there is no impact of it at all. In fact, the market is much worse right now than where it was.

Nifty India Defence Index

Defence also cracked hard. There is a sort of a head and shoulders pattern also included in this. So, a lot of pattern-based moves are happening. The whole fall in the small- and micro-cap space is because of the give-up of the support region. So, while technicals are seen as not so important, they do sort of point out towards very vulnerable points in the market and data patterns. Bharat Dynamics, Mishra Dhatu Nigam, Unimech Aerospace, and Bharat Electronics lost most of the ground within defence stocks.

U.S. Market

In the previous session of the US markets, S&P 500, Dow Jones, and Nasdaq all gaining slightly. Russell, however, was down 0.3%. You have Adobe up 5.3% after a long time. This stock has been falling since 700 plus, so it’s a good move here. Salesforce was up 5%.

Booking Holdings, Charter Communications, and Broadcom all did well in the previous session. So, the US market is yet to be hit by any weakness, and the emerging market, especially India, is getting hit by a lot of weakness. So, it’s very counterintuitive sometimes when you think about where the growth is coming and where the markets are moving. Disclaimer, of course, that some of these stocks may be part of the Weekend Investing US stock strategy. These are not recommendations at all.

Tweet Of The Day

In the Tweet of the Day segment, here you can see the very strong support that small caps have created from June, August, September, October, and November. Almost four or five times this support was tested, and the market did not fall below it, but today it chose to really go down. It is also basically following the micro-cap pattern, a similar pattern, but it broke down two days earlier. And this was the tweet in the morning that if we don’t recover today, it’s a significant breakdown.