Where is the market headed?
The market started the day with a strong showing but unfortunately gave up some of those gains by the closing bell. Jitters from overseas continue to persist, particularly regarding the rapid release of new AI agents by technology companies. These advancements are expected to disrupt more industries; today alone, a list of six or seven different sectors was identified as potentially facing disruption. This has created a bit of a scaremongering situation.
Celebrity fund manager Chris Wood has noted that Foreign Institutional Investors (FIIs) are selling Indian equities for various reasons. One primary point is that from a global equity fund manager’s perspective, India is viewed as the reverse AI trade. Essentially, as long as the AI trade continues to run globally, India may not see significant fund flows. However, as soon as the AI cycle starts to turn, it is certainly possible that the Indian market could be flooded with funds.
The main question remains whether the AI trade has reached a level where exponential growth will slow down into a sideways trend. Globally, some stocks in the AI space are no longer rising as they become burdened by heavy capital expenditure without immediate returns. While AI infrastructure companies are running up on future hopes, regular Main Street companies, especially in the US, are not yet seeing a major trigger in either direction.
Market Overview
In recent weeks, FII selling in India has trimmed down dramatically. Net-net, they have actually been buyers in February, suggesting that downsides may now be very limited as the selling pressure dries out. Despite the global scares, the market may be forming a bottom with an intention to move up. This strength was visible in the morning, though it simmered back by the afternoon. Looking at the Nifty charts, the index almost challenged yesterday’s high but gave most of it back, ending up 0.23%. Surprisingly, the first gap from the initial US deal announcement remains unfilled despite many sessions trading near this range, indicating underlying strength.
Nifty Next 50
Other segments of the market are showing even more positivity. Nifty Junior is on a different path, hitting a recent high with a gain of 0.89%.
Nifty Mid and Small Cap
Mid-caps and small-caps followed suit, both moving up by 0.64%, showcasing a very stable environment.
Bank Nifty
The Nifty Bank was the outlier today, ending absolutely flat with a negligible dip of 0.01%.
GOLD
In commodities, gold is on the move again, priced at 16096 with a 1% gain, while silver saw a fast breakout of 4.3% to reach 2,81,504.
SILVER
Advance Decline Ratio
The market breadth was quite decent, with an advance-decline ratio of 309 advances to 191 declines.
Heat Maps
IT stocks saw a hard jump in the morning but gave back a significant portion of those gains. It is advisable not to jump in and buy IT stocks immediately; it is better to wait for consolidation and the formation of a clear new trend. While a V-shaped recovery is always a possibility, it currently looks unlikely, so it is important to ensure the trend is in your favor rather than trying to catch a falling knife.
Large caps like TCS, HCL Tech, Infosys, and Wipro saw some gains, while Reliance and SBI were pushed down by 2% each. Within the banking sector, Kotak Bank was down, while Axis and ICICI closed higher. Auto and steel stocks performed well, whereas ITC and Bharti lost ground.
In the Nifty Next 50 heat map, Vedanta, Hindustan Zinc, TVS Motors, Hyundai, and Divi’s Labs performed well. Conversely, Adani Power, IRFC, and CG Power lost ground.
Mover Of The Day
A notable mover of the day was Concord Biotech, which jumped 14% after hitting a 52-week low, possibly due to a dead cat bounce.
Sectoral Overview
Pharma was a strong sector today, up 1.85%, but Metals took the lead with a 2.7% gain. Autos followed at 1.8%, with IT, Manufacturing, MNCs, and Capital Markets also ending in the green. On the downside, losses were minimal, restricted mostly to PSU banks and infrastructure, though both sectors remain top winners over the last month with gains of 11.4% and 7.7% respectively.
Sector of the Day
Nifty Metal Index
U.S. Market
The US markets experienced a relief rally last night following a downturn two days prior. AMD rose 8.7% after being previously smashed down, while PayPal and Intel rose 5.7%. Booking Holdings and Salesforce also gained between 4% and 5%. While these are not recommendations, some of these stocks could be part of the Weekend Investing US stock strategy. The major indices moved up between 0.8% and 1.2%, with the NASDAQ heat map showing a largely green field led by chip makers.
Tweet Of The Day
A comparison of the “FAANG” group versus the NASDAQ reveals some surprising trends from the last year. While the NASDAQ is up 17%, Apple has underperformed at 10%, and Amazon, Meta, and Netflix are all down. Google is the only outlier that has outperformed the group, largely due to its focus on AI. This theme continues to play out strongly for specific stocks, and India’s future fortune may be determined once these AI stocks stop rising or begin to fall.
