Where is the market headed?
Very recently, significant news emerged that 8 lakh GST registrations have happened in just Uttar Pradesh over the last six months. Currently, UP accounts for about 17% to 18% of the country’s population, yet it only offers about 8% to 9% of the country’s GDP.
This gap indicates an enormous potential for UP to really pick up and rise to national averages. Good things are brewing inside UP, and there is a noticeable increase in economic activity, or at least the formalization of economic activity there. A lot of times, when markets are in complete dismay and nobody is looking at markets to do well in the next one or two years, themes emerge that nobody is talking about and nobody is expecting, which ultimately lead the way going forward.
This development is not necessarily the definitive trigger for the market, but markets are in a reasonably good situation from the point of view that they are very near all-time highs and are not reacting very poorly to global bad news whenever it comes. That resilience itself tells you that the undercurrent is now reasonably strong, and a good trigger is needed to launch the run from here. That is the side news to share before moving forward.
Market Overview
Turning to the daily byte for Monday, July 6th, the usual disclaimer applies, and everyone is requested to read it fully before moving forward. The nifty chart is promising a 0.66% gain. The market is at the top end of the range made since the mid-April peak. It has taken a few months to come back near it, and once it is crossed, perhaps there will be more room on the upside.
Broader Market Indices
The other indices were also all green, with the Nifty Next 50, Mid Cap 150, and Small Cap 250 all up near 0.4% to 0.5%, and Bank Nifty gaining 0.6%. Overall, it was a stable and decent day for the markets.
Heat Maps
HDFC Bank led from the front, climbing 3.6% after its update for the quarter. ONGC, Tata Motors, Bajaj Auto, Mahindra and Mahindra, Eicher Motors, and Hindalco were among the other stocks that were doing well today. On the other hand, Kotak Bank was down along with TCS, UltraTech Cement, and ITC.
In the Nifty Next 50 space, there was a bounce in capital goods stocks that had been thrashed in the previous session, with Cummins, CG Power, Engie, and ABB all bouncing back. DMart also bounced. There were some good gains in Adani Enterprises, while some losses in PSU Banks continued as Bank of Baroda, Union Bank, Canara Bank, and PNB were all down. Chola Finance did well, and Muthoot Finance was also doing well.
Top Gainers & Losers
Sectoral Overview
In sectoral trends, real estate gained once again, climbing 1.8%. Over the last one week, real estate has delivered a 17.7% return, marking a complete comeback for the sector over the last month. It also stands as the second-best performing sector after Nifty Pharma.
Returning to the daily charts, autos advanced 1.3%, followed by oil and gas, India manufacturing, and metals, which all secured gains near 1% to 1.5%. On the losing side, Nifty IT lost ground once again. Over the last one month, Nifty IT has become the worst-performing sector at minus 14%. PSU banks lost nearly 1%, capital markets were down 1%, and media stocks also fell nearly 1%.
Sector of the Day
Nifty Realty Index
Focusing closer on the real estate space, the scale of the real estate rally is striking, moving from 720 or 730 to 900 within a matter of less than a month, representing a gain of almost 20% or more. The last five sessions have been phenomenal, with Brigade Enterprises, Lodha Developers, Phoenix Mills, Prestige, and Godrej Properties being the significant reasons why real estate stocks are going up. An inverted head and shoulders pattern appears to be forming here, and the neckline just got breached.
Tweet Of The Day
The tweet of the day features Ron Baron, who explains the silent math that destroys wealth. He points out that your money loses 4% to 5% of its purchasing power every year while the economy goes up about 2% every year, speaking in the US context. Essentially, individuals get poorer by about 7% annually, which means that prices double every 10 to 12 years whereas savings are cut in real terms within about 15 years. Cash sitting idle, whether under a mattress or even in the bank, is not safe, and savers are losing ground on a daily basis.
The system is structurally engineered to punish savers, meaning that anyone putting money away without investing is choosing to let their purchasing power go down gradually and knowingly. If individuals do not know about this, they better educate themselves because of the way inflation is likely to come in years to come, leaving those sitting with cash or money in the bank to lose out very big.
