Where is the market headed?
Precious metals and the broader metals and commodities markets have experienced a collapse. After an extremely robust run over the last three days, the entire gain of that period has been given up. The fall from the top in gold prices is dramatic, dropping about $600 from 5,600 to near the $5,000 level.
The main trigger for this volatility is that President Trump is likely announcing the next Fed chair tonight. This announcement is critical as it hinges upon whether the incoming chair is dovish or hawkish, how they will handle interest rates, and how the balance sheet will be managed.
Market Overview
Looking at the Nifty charts, the Nifty opened weak but recovered to close down 0.39%. The market has remained range-bound for almost seven days, but both short and long-term outlooks remain positive.
Nifty Next 50
Nifty Junior was down 0.83%, mid-caps were flat, and small caps gained 0.85%, looking better than large and mid-caps for the first time as their short-term trend turned positive.
Nifty Mid and Small Cap
Bank Nifty
Nifty Bank was down 0.58%, though momentum trends remain positive.
GOLD
Gold saw a 6% drop, turning its short-term trend negative while mid and long-term remain positive.
SILVER
Silver was smashed down 14%, also turning negative in the short term. However, the previous run-up was so significant that a 14% fall only brings prices back to where they were five days ago.
Advance Decline Ratio
The advanced-decline trends were smashed down with 319 advances to 181 declines.
Heat Maps
On the heat map, stocks that had been running up like Coal India, ONGC, ICICI Bank, HDFC Bank, Tata Consumer, and Hind Copper were all down. Hindalco and Power Grid also saw declines. Conversely, Nestle, Maruti, Titan, M&M, TVS Motors, and SBI were up. It appears no specific sector is expecting much from the upcoming budget.
HindZinc, Vedanta fell 11% and 12%, while Adani, Solar Cement, and Jindal Steel were also down. Gains in Bajaj, Hyundai, Britannia, and United Spirits suggest the FMCG sector is primarily green as capital rotates toward defensive stocks.
Mover Of The Day
The mover of the day was idea, up 11.1% on news of a 45,000 crore investment plan for 5G network growth.
Sectoral Overview
Sectorally, metals were dramatically down today, yet they remain the second-best performing sector over the last month with a 7.5% gain. The metal space has seen a 25% run-up in just two months, moving from 10,000 to 12,500, making a correction par for the course. Many metal stocks saw nearly double-digit falls today. Commodities fell 2% and capital markets dropped 1.8%. Currently, the best-performing sectors are Media, Defense, FMCG, and Tourism.
Sector of the Day
Nifty Metal Index
U.S. Market
In the US, markets fell in the previous session with the Nasdaq down almost 0.5%. Significant damage was seen in big names: Microsoft dropped nearly 10% and ServiceNow fell 9.9%, while Intuit, Salesforce, and Altria Group also declined. Some of these may be part of the Weekend Investing US stock strategy, though these are not recommendations. Notable movers included Meta, which rose nearly 10% post-results, while Microsoft fell nearly 10% following its own results.
Tweet Of The Day
The Bitcoin chart is looking extremely dangerous, forming a head and shoulders pattern. If it stays below approximately 80,000, the pattern target could be near 40,000. This suggests a massive pattern breakdown as liquidity moves out of crypto, metals, and US markets due to high uncertainty regarding the Fed Chair. Once that change occurs, markets may stabilize.
For the Indian perspective, the budget on Sunday is a vital event. Indian markets could face a very volatile time as they react to both the budget and tonight’s Fed Chair announcement.
