Where is the market headed?
Morgan Stanley recently shared an update in their strategy playbook on the 8th of April, noting that Indian equities are currently sitting at a rare confluence of worst trailing returns, rough valuations, and rising earnings. Historically, this specific setup has not lasted very long. A look at the charts reveals that the Sensex is at its cheapest level in gold terms right now. Similar bottoms were seen in 2003, 2009, and 2012, all of which served as precursors to huge moves in the Sensex. According to goindiastocks.com, when positioning is light, valuations are cheap, and earnings are accelerating, the market tends to move fast. India may be at that point once again.
While it is difficult to know conclusively if we are at that exact point, all indicators suggest that this can be an opportune time to invest or stay invested. Markets rarely signal a bull run before it begins; instead, the market often climbs a wall of worries in the initial phases, much like what is happening right now. A very quick 10% to 15% move has already occurred before anyone could blink. This has left many who are out of the market caught in a dilemma of whether to jump in now or wait for pullbacks.
Even recently, after being down nearly a percent, the Nifty came back to close very near flat ground. This creates a tricky situation for those with money sitting on the sidelines, wondering if they are going to miss the bus. Since this story has repeated many times in the past, the best approach is to have a plan, stick to a strategy, and avoid second-guessing the market, as timing never works for anyone.
Market Overview
The Nifty chart is looking absolutely good. After almost nine sessions from the bottom, there has been a recovery of more than 10%. It would be no surprise to see the index lock itself in the region of 24,800 to 26,000 in the coming weeks. The key decision then will be whether the Nifty breaks out or consolidates further.
Nifty Next 50
Meanwhile, Nifty Junior has made a V-shaped recovery. Despite poor news throughout March leading to a decline, just two weeks of April have brought it back to where it was. All momentum trends on Nifty Junior have turned positive, up 1.07% for the day.
Nifty Mid and Small Cap
Mid-caps also rose 0.63%, with all trends turning positive. Small caps are up 0.92%, and crossing 16,400 could trigger another bout of bullishness.
Bank Nifty
Nifty Bank was the only soft index today, down 0.38%, though consolidation is expected after a recent run-up.
GOLD
Gold remains very flat at 0.13%, while crude oil is trading near $95 and $96. A narrative is building that crude may not return to the $60 level. This is partly due to damaged refinery capacities in Iran and elsewhere, which could take years to restore.
Even if crude prices dip, refined products may remain difficult to obtain. An average ballpark of $80 to $90 may persist, which would make inflation a worry for the world since crude oil is a primary input for most activities. Consequently, dreams of reducing interest rates and low oil prices seem unlikely to be realized anytime soon.
Crude Oil
Advance Decline Ratio
The advanced decline trends for the day were very good, with 332 advances to 167 declines. Despite being a potential dip day, the market is showing signs of strength. This strength persists even though the narrative suggests otherwise; GDP rankings have slipped, growth is sputtering, and FIIs are still selling. However, the market seems ready for a new story.
Heat Maps
The heatmap was a mixed bag, with Adani and metal stocks doing well while banking stocks, led by HDFC Bank, lagged. Notable gainers included Eternal, Hindalco, Adani Ports, and Adani Enterprise. In the Nifty Next heatmap, PFC, Adani Power, Adani Green, Varun Beverages, HAL, Divi’s Lab, Hyundai, Hindustan Zinc, and Vedanta performed well, while others saw profit booking.
Movers Of The Day
In the mover of the day segment, GMDC surged 20% to a 52-week high, marking a complete breakout after six months of consolidation. FSL jumped 11%, having been up as much as 18% during the day, potentially signaling a bottom for the stock.
Sectoral Overview
Sectoral trends were mostly positive, with defense leading at 1.6% as part of a visible rotation from metals. Metals remained strong at 1.5%, capital markets at 0.76%, and IT stocks at 0.88%. Private banks were the only sector down more than half a percent. Over the last month, capital markets led with a 15% gain, followed by metals at 12%, real estate at 11.5%, and defense at 10.5%, while Nifty FMCG and Pharma lagged.
Sector of the Day
Nifty India Defence Index
Specifically, the defense sector jumped nearly 20% in two weeks, with stocks like Aequs, Mishra Dhatu, Astra Micro, Astra Microwave, Axiscades, and Paras Defense doing wonderfully.
Nifty Metal Index
Metals also saw a 20% move weekly, with Lloyd’s Metal, Adani Enterprise, Hindalco, Hind Copper, and SAIL as top performers.
U.S. Market
In the US Markets, the previous session saw Tesla move up 7.5%, ServiceNow 7.2%, and Microsoft, Intuit, and Palantir moving between 4% and 6%. The Dow Jones was mildly down, but the S&P 500 rose 0.8%, the Nasdaq was bullish at 1.4%, and the Russell index was up 0.3%. Some of these stocks are part of the Weekend Investing US stock strategy. The Nasdaq 100 heatmap looks strong with Microsoft, Apple, Palantir, Tesla, Avgo, and Nvidia performing well.
Tweet Of The Day
A tweet from Global Markets at Weekend Investing highlighted that the S&P 500 has seen a classic V-shaped recovery and is at an all-time high. There is no reason to believe other markets won’t follow. It is time to shed the pessimistic view and look at the market more optimistically. Even countries involved in conflicts are hitting new highs, so we should not be too bogged down by external worries when the market is telling a different story.
