Where is the market headed?
Some very interesting market data reveals a striking trend when looking at a 10-year chart comparing HDFC Bank (represented by the white line), the Nifty (the green line), and Gold in Indian Rupees (the blue line). A lot of people do not realize that over the last 10 years, HDFC Bank has actually not outperformed the Nifty. It used to do so in the past, but it has not during this latest 10-year period. Even more surprisingly for many, Gold has massively outperformed both the Nifty and HDFC Bank.
What really needs to be understood and derived out of this situation is the importance of following the liquidity and seeing where the actual moves are happening. For instance, HDFC Bank has been stuck at the same price for the last five years. There are many examples in the market where, despite the accolades and the feathers in their caps, stocks have simply not performed. DLF, for example, is still yet to cross its 18-year high.
Equating stock price performance versus on-ground company performance can really lead to some bad outcomes. Of course, this does not mean HDFC Bank will not go up in the future, but the idea of buying HDFC Bank and automatically doing well has been so ingrained in everybody’s mind, yet that is clearly not the case in every period.
Between equities and gold, a lot of people will not believe it until they see the charts, but Gold has actually done 400% in the last 10 years versus 200% on the Nifty. Whether it will continue to do that or not is unknown, but certainly, having some asset allocation, stock diversification, and following stronger stocks helps in keeping pace with the markets.
Market Overview
Diving into the markets today, for once, the Nifty did not move at all, closing at minus 0.03%. However, the broader market was moving in a big way. Perhaps the market is still waiting for the final deal between the US and Iran to come out. Crude oil is dropping, and hence the market is assuming that the deal is getting finalized very, very shortly.
Broader Market Indices
Other market indices were in a different zone altogether. The Nifty Next 50 was up 1.4%, largely on the back of Adani stocks. Mid-caps and small-caps also gained 0.4% and 0.55% respectively.
The Nifty Bank was the one index that was sulking, closing down at minus 0.43%, which was largely on the back of HDFC Bank moving down a couple of percent.
GOLD
Gold is also sulking somewhere around 15,888 per gram in Indian rupees, unable to really pull up right now.
Crude Oil
Meanwhile, crude oil is dropping and has now hit a new almost two-month low near $93, which is great news for India.
Heat Maps
Looking at the heat map, major bellwethers like ITC, ONGC, HDFC Bank, ICICI Bank, Infosys, and Wipro were not performing today. On the other hand, the stocks that were performing in a bigger way included Hindalco, Tata Motors, Maruti, Eternal, and NTPC. What happens in this scenario is that the larger weights in the Nifty do not perform while the smaller weights do, meaning the Nifty itself does not actually move.
However, looking at what is happening in the Nifty Next 50, Cummins shot up 11% after its results, Motherson went up 4.5%, and Siemens and ABB were up nearly 6%. Adani Enterprises rose 5%, and capital goods stocks like CG Power and Enrin are all running really, really hard. Commodities are running hard and metals are running hard as well. It is only the banking and finance space, along with the consumption space, that remains really quiet.
Movers Of The Day
The mover of the day was JP Power, which rose 20% to reach 22.8 after Adani Power completed its stake purchase. Zee Entertainment also jumped up 10% as it is close to securing the FIFA World Cup broadcasting rights.
Because the media index on the NSE is heavily weighted towards Zee Entertainment, the media sector as a whole was running very, very hard.
Sectoral Overview
Within the sectoral trends, the media sector was up 3% purely on the back of Zee. MNC stocks, mostly consisting of capital goods, were up 2%, energy stocks gained 1.7%, metals rose 1.6%, and autos also did well at 1.4%, followed by manufacturing stocks up 1.3%, with other sectors gaining less than that. What was falling, very surprisingly, was the capital market sector, experiencing an odd sort of sell-off at minus 1.66%. Other sectors remained a bit mute for the day.
Sector of the Day
Nifty Media Index
Taking a closer look at the media stocks, Zee Entertainment went up almost 11%, with Saregama, Sun TV, Hathway, and Tips also contributing to that positive move on the media index.
Nifty Capital Market Index
In contrast, the capital market space saw sell-offs in MCX, BSE, Angel One, 360 One, and Indian Energy Exchange, which are mostly exchanges. Perhaps some large FIIs sold off some stakes, as there was no apparent news for this kind of a fall in the capital market space, or maybe there is a huge sector rotation happening out of there.
U.S. Market Updates
Tweet Of The Day
In the previous US markets session, AMD went up another 8%, Texas Instruments rose 5%, and Qualcomm gained another 4.4%. GE Aerospace and Emerson Electric were also up 3 to 4% within the S&P 100 space. The broader indices were reasonably flat, with the Dow Jones actually ending negative.
The S&P 500 was positive by 0.6%, but the NASDAQ jumped 1.7% and the Russell rose 1.8%. Extremely concentrated moves are happening in the AI and chip space, showing a screen full of green in that specific sector. Micron Technology was up 19%, AMD was up 7.7% once again, and Intel and ARM moved up as well. This entire space is just running very, very hard.
Meanwhile, the rest of the stocks like Cisco, Microsoft, Walmart, Costco, and Netflix did not do so well, and Nvidia and Apple were also very, very flat. Amazing kinds of moves are happening in just one isolated space in the market.
Tweet Of The Day
In the tweet of the day segment, there is an interesting chart of HFCL. Looking at the history of HFCL, during the 2000 dot-com boom, this stock skyrocketed from 15 rupees to 2,100 rupees in just a matter of a few months, before coming all the way back down to single digits and lying dormant.
In the last few years, it has started to perk up again, and today it made a 25-year high since 2001. Even so, it is still much, much lower perhaps 92% to 95% lower than its all-time highs.
This proves there is a time to be in a stock and a time to be out of a stock. Investors should not marry any stock or just buy and hold until their last day, because every stock has an expiry date and no one knows when that comes through. Anyone wishing to take a look at some of the leading stocks driving strength in the market can follow any of the momentum model portfolios to have the full list in hand.
