Where is the market headed?
The global and domestic markets experienced significant movements recently, starting with a major development from IBM. The company released its latest financial numbers, resulting in a market debacle that wiped out sixty to seventy billion dollars of market capitalization in mere minutes. With IBM shares plummeting twenty-six percent, the shockwave impacted enterprise software companies globally. In the United States markets, Infosys initially fell by nearly eight percent immediately before recovering to close at almost minus three percent. Surprisingly, the Indian market showed strong resilience today, with Infosys dropping only about one and a half percent.
This repeated battering of information technology stocks suggests that negative news is no longer shaking them as severely as before. It appears these stocks are reaching some kind of floor level, where further declines would require more substantial, material negative impacts on their business to be established. While momentum investors will not touch these stocks with a barge pole, those who wish to accumulate information technology shares for the long term may find the current environment to be an opportune time to start doing so.
Market Overview
The market ultimately gave up its small morning gains, which had pushed the index up to almost 24,020. Around 12:30 or 1:00 PM in the afternoon, a sudden smash down of one hundred and fifty points occurred within minutes, forcing the markets to close at absolutely zero points. The index remained completely range-bound, preventing any sustained upward movement.
Broader Market Indices
Despite the flat headline index, the broader market fared slightly better. Both the Nifty Next 50 and the Midcap index gained 0.4%, while Smallcaps rose by 0.6% and Bank Nifty advanced by 0.5%. This positive sentiment followed the previous night’s US market session, where inflation figures came in lower than expected. This lower inflation data triggered a wave of moves across emerging markets, precious metals, and risk assets, as it pushed back the immediate probability of an interest rate hike.
Heat Maps
Consequently, banking and finance stocks perked up, alongside some modest gains in the automotive sector. On the downside, losses occurred in metals, commodities, and infrastructure stocks. Within the Nifty group, Adani stocks experienced some outflows, with Adani Power and Adani Green both ending down, while Vedanta also declined. Meanwhile, capital goods stocks saw decent gains, with CG Power, ABB, Cumin, Siemens, and Enrin all performing well.
Top Gainers & Losers
Sectoral Overview
Looking at sectoral performances, the metal sector lost the most, dropping 1.2%, while PSU banks gained almost a percent for the day. Oil and Gas also gained about 0.7%, while Nifty IT and Central Public Sector Enterprises both lost 0.7%. The remaining sectors remained muted, hovering within a tight plus-or-minus half a percent range.
Sector of the Day
Nifty Metal Index
Within the metal space, several stocks lost ground. Following a spike in the middle of June, the overall trend has been downwards, and this sector, which was leading the markets until the beginning of June, has now taken a backseat. Vedanta, Hindalco, JSW, Tata Steel, and Steel Authority of India all lost ground, contributing to a 1.1% decline in the metal space.
U.S. Market Update
Meanwhile, the previous session in the US markets ended in the green, with the Nasdaq 100 rising 1.1%, the S&P 500 up 0.4%, the Russell 2000 up 0.4%, and the Dow Jones remaining flat. Top gainers in the US included Goldman Sachs, which reported a fantastic, bumper result with one of its biggest-ever quarterly profits, along with Intel Corporation rising 4.5%, Nvidia, Morgan Stanley, and Palantir Technologies. The main loser was IBM, which suffered a major 25% drop, while Intuitive Surgical, ServiceNow, Citigroup, and Medtronic plc all lost between 5% and 7%. Some of these US stocks could be part of the Wicked Investing US stock strategy.
The Nasdaq 100 heat map looked reasonably even, showing some solid green patches. Apple and Microsoft moved up, while Walmart was slightly down and SpaceX declined once again. Strong upward moves were observed in the semiconductor and AI spaces, including ASML, AMD, Micron, Nvidia, and Intel, suggesting that a reasonable correction has already taken place in those areas. Reflecting this global momentum, the Korean market also bounced back very hard today after facing a significant sell-off over the past month.
Tweet Of The Day
In the daily featured segment, the focus was on the US M2 money supply chart, which tracks the money created by the Federal Reserve. This figure has hit an all-time high of twenty-three trillion dollars, existing either physically or digitally within the system. As the availability of dollars increases, asset classes such as real estate, gold, and equities naturally rise, because money supply is the fundamental creator of inflation. Without a rising money supply, inflation cannot happen.
This dynamic represents a hidden tax, wherein the monetary base keeps expanding and asset values go up, while those who are not invested in real assets or equities continue to lose ground. Holding physical or digital money under a mattress or in a bank means its real purchasing value decreases every year because more money is continuously getting printed.
