Where is the market headed?
We are currently at the 50-day mark in terms of the war. With the two-week ceasefire set to expire in the next 48 hours, it is very interesting to note that Iran is claiming they will not renegotiate anything, while Donald Trump is stating that a deal will be done. Deciding whose word to believe remains the question, and the answer will likely be revealed by Wednesday. The market, however, is showing signs of resilience. While it is not hitting new highs like the US market, the fact that the market has not dropped following the weekend news—that the Strait of Hormuz was opened and then closed, that no ships were passing, that Iran refused to negotiate, and that the US threatened significant retaliation—indicates an underlying undercurrent of strength.
Whether this changes on Wednesday remains to be seen, but the market is currently holding its ground and appears to be positioning itself for a de-escalation of the conflict. It would be a rude surprise if escalation occurs on Wednesday, as that could trigger a downside move.
Market Overview
Regarding the charts, the daily chart on the Nifty is looking reasonably decent. It has been two sessions since the market bottomed on the 1st of April, and it has not given up ground for two sessions in a row, which signals underlying strength.
Nifty Next 50
The Nifty Junior has run up from 60,000 levels to almost 70,800 levels. Although it was flat today, all trends have turned positive.
Nifty Mid and Small Cap
Mid-caps are also doing alright, remaining absolutely flat today while staying very near their February highs, with all trends positive there as well. Small-caps are gradually moving up, showing a minor 0.36% dip today, but they have more than recovered the losses from the entire month of March.
Bank Nifty
The Nifty Bank index is also flat at 0.03%, suggesting the entire market was essentially frozen awaiting new information expected in the next 48 hours.
GOLD
Gold is flattish at minus 0.37%.
Crude Oil
Crude oil jumped up by 2.73%, which is not a significant move, especially considering the fear surrounding the breakdown of negotiations.
Advance Decline Ratio
Regarding the advance-decline ratio, declines were high during the first half-hour, after which advances started to gain ground. However, toward the second half of the day, advances began to decline and the number of declining stocks rose. The day ended with 331 declines, slightly in favor of the bears. Given that the market has been running up for 15 days, some uncertainty and profit booking are quite normal.
Heat Maps
The State Bank of India and JSW Steel were pulling the Nifty up, along with ICICI Bank. On the Nifty Next 50 heat map, there were several stocks with smaller losses. Adani stocks, energy stocks, and capital goods stocks continue to run, with CG Power, ABB, and Enri all performing well. Vedanta lost some ground, down 2.1%, while Dmart, HAL, and VBL saw small profit booking bouts, but there was no major fall anywhere on the Nifty Next 50.
Movers Of The Day
In the mover of the day segment, Sterling and Wilson Solar made a big move after a long time, jumping 9% for the day after winning a Coal India project. On the other hand, IEX dropped very hard by 8%. Many investors have been accumulating IEX, but the stock has shown virtually no strength or momentum for the last many quarters, and today provided another rude shock.
Sectoral Overview
Regarding sectoral trends, the capital market saw profit booking of 1%, though that is not a major concern. Nifty IT was down 0.7%, real estate was down 0.6%, and defense was down 0.6%. On the gaining side, media, PSU banks, energy, and public sector enterprises performed well. For the month gone by, all sectors are still gaining quite nicely, except for Nifty Pharma, which is flat. In the media sector, Zee, Sun TV, and PVR moved up slightly, while Saregama and DB Corp were negative. The capital market sector saw some profit booking, with India Energy Exchange, Billion Brains, BSE, CDSL, and Nuvama Wealth all moving down in that index.
Sector of the Day
Nifty Capital Market Index
Nifty Media Index
U.S. Market
In the previous session of the US markets, Emerson Electric, GE, General Motors, Booking Holdings, Lowe’s, and Home Depot all performed well. All market indices were up between 1% and almost 2%, as the US market is pulling up very strongly. This may be pricing in the end of US involvement in the war. Wednesday night will serve as a reality check for the US markets to see if the US is indeed out of this war.
The NASDAQ 100 heat map is looking quite well, with Tesla, Meta, Google, Apple, Nvidia, AVGO, and Walmart all contributing to that gain.
Tweet Of The Day
Regarding the National Stock Exchange (NSE) unlisted stock, there is an interesting debate about why it is not flying. Despite positive news regarding the NSE IPO and the fact that the BSE is flying at new highs, the NSE still trades in the unlisted space at 25% to 30% below its high. Some argue it is a great buy due to lower valuation compared to the BSE, but both are quoting at high valuations, with the BSE at roughly 60 times earnings. Regulators are also looking at curbing derivative volumes and restricting retail participation in the FNO segment, which is a major part of exchange earnings.
Other theories for the price lag include the six-month lock-in for pre-IPO buyers, meaning investors are looking at the next 15 months with no exit. It remains a mystery why a stock with an upcoming IPO and a cheaper valuation than its market equivalent is not rising. Thoughts on this situation are welcome.
