Where is the market headed?
This marks the end of what can only be described as a disastrous week for the markets. The Nifty continued its downward journey today, notably breaking below its 200-day Daily Moving Average (DMA). The 200 DMA is a critical psychological mark; when the market falls below this level, it often signifies that the underlying strength of the market has been broken.
In this update, the focus is on the movement of real assets like real estate, gold, and silver compared to financial assets. While financial assets are also real assets, their ease of buying and selling, combined with low transaction costs, leads to much higher volatility. This often results in investors selling during moments of despair. Taking ITC as an example—not to criticize the company, but to illustrate a point—a look at its chart in gold terms reveals a striking reality.
While most people measure wealth in fiat currencies like rupees or dollars, which have been the standard since 1971, the true worth of an asset is best measured against gold. When assessing ITC in grams of gold, it is currently at a 27-year low, even when including all dividends and bonuses. Effectively, an investment in gold 27 years ago would have yielded the same return as ITC today.
Market Overview
Turning to the current market performance, the last 14 sessions have seen a dramatic drop from 26400 to a close of 25048. Being below the 200 DMA after a failed attempt to resist this level two days ago suggests the market is looking into an abyss with the potential to go lower. Momentum trends are down across the board, painting a dismal picture.
Nifty Next 50
The Nifty Junior fell 1.97%, erasing the gains of a recent “dead cat bounce,” while Mid caps were unable to cross their own 200 DMA and dropped 1.72%. Small caps followed suit with a 1.95% decline.
Nifty Mid and Small Cap
Bank Nifty
Meanwhile, the Nifty Bank was smashed down 1.23%, showing that no pocket of the market was spared.
GOLD
In contrast, gold and silver are rising. Gold stands at 15414, and silver surged 2.66% to 307781, with both showing positive trends.
SILVER
Advance Decline Ratio
The advance-decline ratio was poor, with only 74 advances as the day ended in a sea of red.
Heat Maps
Specific stocks took significant hits. Zomato fell 6% following the notification that Deepinder Goyal is leaving the CEO position. Cipla dropped 4% and Adani Ports fell 7%. Other heavyweights like State Bank of India, Axis Bank, and Jio Finance were also down.
Some IT stocks remained stagnant rather than falling, aided by a crash in the rupee as the USD/INR reached almost 92, providing comfort to exporters. Hindustan Zinc rose 4.5% on the back of silver’s movement, but Adani stocks—including Green, Enterprise, and Power—were badly battered, along with Ambuja Cement which fell 5%. The breach of the 200 DMA likely triggered selling from quant funds that use this metric as a mandatory portfolio exit point.
Mover Of The Day
In the “mover of the day” segment, Tanla rose 7.29%. While this may be a dead cat bounce, a positive move following financial results is a welcome change after its previous dramatic decline.
Sectoral Overview
Looking at sectors, IT was the least affected, down 0.17%, but real estate was butchered, falling 3.34%. Over the last month, the real estate sector has dropped 14.4%, erasing its earlier gains for the year. Over a 12-month period, PSU Banks and Metals remain the top outperformers, while Media, Real Estate, Tourism, and IT have been the worst.
Sector of the Day
Nifty Realty Index
Specific real estate stocks like Anantraj, Godrej Properties, and DLF fell between 3% and 6% today.
U.S. Market
In the US, markets showed a different story with indices up between 0.5% and 0.8%. Meta rose 5.6%, and others like Tesla and Salesforce saw gains of 3% to 5%. While some of these are part of the Weekend Investing US strategy, they are mentioned for context and not as recommendations. Interestingly, even in the US, consumption-related stocks like Walmart, Costco, and Netflix saw declines.
Tweet Of The Day
A notable observation today involves DLF. Despite reporting yesterday that they are now debt-free after 71 quarters and sitting on 11,600 crores of cash, the stock fell further. This serves as a reminder that market narratives are often already “priced in” or discounted long before official announcements. One should never jump into a purchase based on news without assessing if the market has already moved in anticipation.
