The WeekendInvesting Newsletter
Another superb initiative from our Research Desk is The WeekendInvesting Newsletter. This is a daily newsletter that summarizes all the stories we cover during the day(market nuggets), including the daily byte that we shoot every evening. This newsletter will be delivered to your email every evening on market days, providing you with a wealth of market-related information. The newsletter includes both summaries and long-form blogs for all the market nuggets covered. These blogs are also linked to the videos we shoot, so you can choose to watch or read the content according to your preference.
Check out our past newsletters.
Nifty on the Daily Chart – 50 & 200 DMA Perspective
This week’s performance was a welcome surprise, with Nifty 50 gaining 1.9%. If asked last week whether such a recovery was expected, the answer would have been doubtful. The market has been in a continuous downtrend since October, with only sporadic recoveries, reinforcing a bearish mindset. The past five months have been predominantly negative, which is a rare occurrence in market cycles.
Nifty – Weekly Perspective
Historically, when Nifty spends an extended period within a particular range, such as the first half of 2024 when it hovered between 22,000 and 22,800, those levels tend to act as strong support zones. The market typically does not break such levels easily without multiple tests and retests. Even in earlier declines, a brief pause was observed before further corrections.
Given that five consecutive months have been negative, March was likely to break the streak. It is extremely rare for six straight months to be negative. The first week of March has already posted gains, and the hope is that the remaining three weeks will follow suit. While some liquidity may be drained due to advance tax payments, the RBI’s liquidity measures could offset this. Additionally, investors seem to be finding current levels attractive, encouraging buying activity.
S&P 500 Overview
A significant development this week has been the S&P 500’s decline of 3.1%. This is a major shift. Looking at the trend, the point at which the Indian markets began their downtrend coincided with the confirmation of Trump’s return to office. Similarly, the US markets have now erased all their post-Trump rally gains. Despite the US market appearing stable, all the price movements that resulted from Trump’s anticipated presidency have been nullified. Several Trump-related trades have also reversed.
The dollar index, which had surged on his return, has now weakened. Tesla, which had spiked from $350 to $500, has dropped below $300. Even Bitcoin, which had surged from $85,000 to $109,000, has retraced to $86,000–$87,000. The initial market expectations from the Trump presidency have now been adjusted, and even the White House appears to be reassessing its decisions. Many executive orders are being reconsidered, postponed, or rolled back due to concerns over inflation and supply chain disruptions. The uncertainty surrounding US policies could finally slow the one-way capital inflows into the US, benefiting emerging markets in the process.
GOLD Overview
Gold in rupee terms had another strong week, rising by 1.39% and closing at ₹86,000 per 10 grams—virtually at an all-time high. The trend in gold remains exceptionally strong. Investors should consider gold as a long-term allocation within their portfolio rather than just a short-term trade. A strategic allocation to gold can help smooth out portfolio volatility and provide stability in times of uncertainty.
Dollar Index Overview
The dollar index has been declining sharply, which is a positive development for emerging markets, including India. While it has not yet returned to its September levels, the rapid fall is a good sign. A continued decline in the dollar index would ease foreign fund outflows from India and reduce pressure on the rupee.
Benchmark Indices Overview
In terms of benchmark indices, small caps led the gains this week, with Nifty Small Cap 250 rising 5.5%. Nifty Next 50, which has been behaving more like a small-cap index this year, gained 4.9%, while mid caps rose 3%. Nifty 500 was up 2.8%, and Nifty 50 posted a 1.93% gain. These are solid numbers for a single week.
However, looking at the past three months, small caps are still down 20.3%, while Nifty has lost 8.6%. The six-month performance remains weak, with Nifty Next 50 down 20%. Over the past year, indices are just about breaking even—Nifty is flat, Nifty 500 is also flat, mid caps are up 1.64%, and small caps are slightly negative. While the recent rebound is encouraging, the damage done over the past six months has been significant.
Sectoral Overview
In the sectoral overview, the defense sector led the market this week with a 10.7% gain, followed by metals at 8.6% and public sector enterprises at 7.4%. Media stocks gained 7%, commodities were up 6%, and central public enterprises rose 6.1%. Energy, oil and gas, and PSU banks all saw gains of 5%–10%. On the other hand, autos and FMCG had a more muted performance, up just 2.5% and 2.4%, respectively.
IT stocks remained sluggish, rising only 1.4%. Capital markets continued to decline, signaling that for the broader market to make a strong comeback, capital market stocks would need to recover first. Meanwhile, banking stocks appear to have gone into consolidation mode. They are neither moving up nor down significantly, which is notable given their heavy weight in the index. This stability in banking stocks is helping to counterbalance volatility in the broader market.
From a sectoral momentum perspective, metals have now taken the top spot across different timeframes. Financial services, which were leading previously, have dropped slightly in the short term but remain strong over longer periods. Commodities have staged a strong comeback, while tourism stocks have weakened. Private banks have started to slip, though defense stocks rebounded this week after a period of underperformance.
Public sector enterprises, both PSEs and CPSEs, along with energy stocks, are showing signs of recovery after being battered over the past few months. These shifts in momentum rankings provide valuable insights into sectoral strength and rotation, helping investors identify potential opportunities in changing market conditions.
Rebalance Update
We give advance notice here on the upcoming changes in your smallcase for Monday. This advance notice can be used to ignore Monday’s update if there is no change. If there is a change indicated you can use the smallcase app or log in to weekendinvesting.smallcase.com to see the rebalance.
Note: We are not including LIQUIDBEES as an ADD or an EXIT count.
