Where is the market headed?
Hi folks. Lately, there has been a lot of talk about investing overseas, with suggestions that Indian markets are not as good as it gets and that perhaps allocations should change. To address this, a look at the last 30 to 35 years of trend watching reveals where the trends of the Indian markets and the U.S. S&P 500 have been. Surprisingly, since data became available around 1990, the Nifty in dollar terms—represented by the white line in the data—has not done poorly at all versus the S&P 500.
Actually, for large periods of time, it has outperformed the S&P 500. While there has been a divergence in the last nine to 12 months, those divergences have occurred several times in the past and have been made up for. The current projection that the India market is not as good and the US market is the only place to go is perhaps a very short-term view. While there could be some allocation to global equities, perhaps not giving up on the Indian market is the way to go.
Market Overview
Looking at the charts, tensions rose again after yesterday’s missile attack on Dubai and ships getting fired at in the Strait of Hormuz. Brent oil went from 109 to 115, causing global markets to take a step back. Indian markets also opened lower, hitting a low of 23,882 today, but closed above 24,000 again. Over the last seven sessions, the market has not really gone anywhere, stabilizing after the initial fall and bounce. We are currently waiting for a trigger to move up or down; although down triggers are plenty right now, the market is not abiding by them. The undercurrent remains slightly biased toward the positive side rather than the negative side.
Nifty Next 50
Nifty Junior was up 0.49%, looking good near its recent highs, while Mid caps were flat at 0.11% and Small caps were flattish at 0.19%.
Nifty Mid and Small Cap
Bank Nifty
No real big moves are happening in the broader market, and Bank Nifty was down 0.6%. Bank Nifty is currently at a gap created earlier in April, and if it starts to bleed, a quick fall to fill that gap could happen.
GOLD
Gold had a tick up of 0.98% at a price of 14,792 per gram in Indian rupees, but it is not moving significantly. Crude oil is around $113 right now, reaching a recent high last seen in February and March 2022 when Russia attacked Ukraine. We are at the cusp of a breakout situation where a major escalation could see oil hitting 120 or 125 very rapidly, creating an edge-of-the-seat scenario.
Crude Oil
Advance Decline Ratio
The advanced decline trends were very flat, ending at 243 to 256 despite several attempts for declines to overpower advances.
Heat Maps
The Nifty heat map showed good support from Mahindra and Mahindra following better than expected results. Other gainers included the Bajaj Twins, Hindustan unilever, Nestle, Hindalco, Ultra Cemco, and Infosys. Some losses were noted in L&T, Bharti Airtel, Maruti, Coal India, SBI, ICICI Bank, and Eicher, while the rest remained largely flat.
In the Nifty Next 50, Adani Green took the lead as Adani stocks continue to run, and Vedanta was up 3%. Other gainers included CG Power, Godrej CP, Solar Industries, LTIM, PFC, and HDFC AMC, while Ambuja Cement, DLF, and Muthoot Finance lost ground.
Movers Of The Day
In the mover of the day segment, CAMS jumped 9% after reporting better than expected Q4 revenues and a dividend, with the stock moving from 600 to 800 recently.
Wockhardt also jumped 8%, surging over 12% to a nine-month high as it transitioned from a loss-making to a profitable company.
Sectoral Overview
Regarding sectoral trends, Nifty Real Estate took a beating today, down 1.4%, while other sectors stayed within a range of plus or minus half a percent. The gainers were the defense sector at 1.28% and capital markets at 1.24%. Defense has reached a recent all-time high and may break out higher if the war escalates.
Over the last month, defense, capital markets, and real estate have all gained nearly 20%.
Sector of the Day
Nifty Realty Index
Within real estate, Godrej Properties, DLF, Lodha, Oberoi, and Prestige lost ground.
U.S. Market
In the US, the previous session saw stocks like UPS drop 10.4%, FedEx 9%, AMD 5%, Qualcomm 4.8%, and Lowe’s 4%. These could be part of the Weekend Investing US stock strategy, though these are not recommendations.
Yesterday, the Dow dropped more than 1% for the first time in days, while the S&P 500 fell 0.4%. Over the last 12 months, the US market has had a fantastic run, with the Nasdaq up 39.7%, S&P up 28.4%, and Dow up 19.8%.
Tweet Of The Day
The tweet of the day segment offers a conceptual learning point. The real estate index peaked in 2008 and remains 50% lower than that peak 18 years later. This highlights that getting out of stocks, sectors, or indices at some point is a must in a strategy, as you cannot keep waiting forever.
Conversely, the metal sector stayed in a range for a decade before breaking out post-2021 and increasing three to four times in value. Often, people get frustrated when a sector doesn’t move and exit just before it pulls away. Sitting in stagnant sectors can dampen your confidence in selecting winners.
