Where is the market headed?
It has been a volatile end to the week, shaped by a heavy flow of geopolitical and macroeconomic narratives. The global landscape is changing rapidly, with news that the US is requesting Taiwan to establish semiconductor factories domestically while simultaneously prohibiting certain Nvidia and AMD chips from being exported to China. In response, China has stated it will not allow those chips under any circumstances.
Further shifts are seen as the Canadian Prime Minister discusses a new world order in Beijing, and the German Chancellor expresses a desire for friendship with Russia, acknowledging its place as a European nation. While Iran previously dominated the headlines, oil prices have since cooled, and that situation appears to have moved to the back burner for now.
Amidst this global mayhem, the Indian rupee has started to slide again. Despite recent intervention by the RBI, significant changes are occurring while the markets remain somewhat stagnant.
The USD/INR pair is now nearing 91 on a weekly basis, closing at a new all-time high. Historically, at such levels, the probability of the rate climbing higher is very significant, and it would not be surprising to see it move toward 92 or 93 in the coming weeks.
Market Overview
The market is currently moving sideways, characterized by a negative short and mid-term trend, though the long-term trend remains positive. Over the last five days, the market has fluctuated within a narrow 200 to 300-point range. Following an up day on Monday and flattish performance on Tuesday and Wednesday, Friday ended with a minimal change of 0.11% after the Thursday holiday.
Nifty Next 50
Nifty Junior and the mid-cap space were also flat, moving 0.1% and 0.04% respectively.
Nifty Mid and Small Cap
The small-cap space showed weakness, dropping 0.47%, though its short-term outlook has turned positive.
Bank Nifty
Bank Nifty remains the standout performer with positive trends across all timeframes. Since banking often leads the market and the budget is approaching, there is hope that a positive leg may develop soon.
GOLD
In the commodities space, gold rose 0.28% to reach 14246 per gram. While international gold prices dipped slightly in the last 24 hours, the weakening rupee helped bolster local prices. Gold remains positive across short, mid, and long-term horizons. Silver also showed resilience, staying strong at 282,000 despite attempts to move it lower, closing only 0.75% down.
SILVER
Advance Decline Ratio
On the domestic front, the advance-decline ratio collapsed after the opening hours, ending with 174 advances to 326 declines.
Heat Maps
The heat map was largely red, with ITC, Maruti, Zomato, Jio, and others dragging the Nifty down, while IT leaders like Infosys, Wipro, and HCL Tech attempted to lead the long side.
Mover Of The Day
A notable mover of the day was IFCI, which surged 8% due to its significant shareholding in the NSE. This gain is linked to the likelihood of an upcoming No Objection Certificate (NOC) for the NSE IPO. While IFCI’s 20-year journey has been unremarkable, its status as an original developmental shareholder is now paying off. In the unlisted market, NSE shares have jumped slightly to around 2100, though they remain 20% below their previous highs.
Sectoral Overview
Sectorally, Nifty IT led the charge with a 3.3% gain, followed by capital markets and PSU banks. Conversely, pharma, energy, and tourism sectors ended the day in the red.
Sector of the Day
Nifty IT Index
The IT sector is currently facing a long-term resistance around 39500, which could signal a major rally if broken.
U.S. Market
In the US, markets showed strength with gains across the Russell, Dow Jones, NASDAQ, and S&P indices. Financial heavyweights like Blackrock, Morgan Stanley, and Goldman Sachs saw significant gains. Within the NASDAQ 100, while the largest companies remained steady, there was major action in mid and small caps; AMD rose 6% and Intel climbed 7.3%, while Adobe suffered a 5.4% drop. These stock mentions are for informational purposes and are not recommendations; please refer to the strategy disclaimer for further details.
Tweet Of The Day
The recent performance of ITC serves as a significant case study for investors. The stock has fallen for 11 consecutive sessions without a decent pullback, likely due to high open interest in the futures segment. Technical analysis suggests a head and shoulders pattern with a target near 300 to 310, levels the stock is now approaching. This episode offers several vital lessons: the danger of over-concentration in a single “beloved” stock, the inherent risk of government intervention in specific industries, and the importance of following trends.
Momentum investing is designed to keep investors out of such danger zones. The downward trend for ITC actually began near 500 rupees, not 400, and momentum-based portfolios had exited the stock long before the current slide. While chasing returns is a common goal, the ability to avoid major traps is perhaps the most valuable lesson. We hope these recurring market lessons are finally taken to heart.
