The WeekendInvesting Newsletter

Another brand new 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.

From the Research Desk of WeekendInvesting

Home – Buy or Rent

A recent chart shows the National Home Price Index in the U.S. compared with the affordability index over the last few decades. What’s interesting is that while the affordability index remains somewhat similar to where it was 20 or 30 years ago, home prices have skyrocketed, especially in the last 30 years. Even though wages might be increasing, inflation is keeping real income levels fairly constant. In simple terms, while house prices are shooting up, the real buying power of most people . . .

Cyclicality in TATAMOTORS

Tata Motors has been a strong performer in the stock market over the last 35 years. The stock has delivered impressive returns, but its journey has been anything but smooth. If you look closely, there have been many periods of extreme volatility and . . .

Have you protected yourself from INR

In recent years, countries like Turkey and Nigeria have seen significant devaluation of their currencies. For example, the Turkish Lira has lost 85% of its value against the US Dollar in less than two years, while the Nigerian Naira has dropped by . . .

Power of combining asset classes

There is an interesting strategy that involves combining two different asset classes—Bitcoin and gold. This strategy shows how these two assets can work together to create a balanced investment portfolio. While each of these assets behaves differently on its own, combining them brings . . .

Central banks pushing price of Gold

Gold has always played a significant role in the financial world, especially in the reserves of central banks. Before 1971, when gold backed the US Dollar, central banks held a large percentage of their reserves in gold, often ranging from 40% to 60%. This made gold a central part of global finance. However, after 1971, . . .

Is Gold Expensive Yet ?

Gold has always been seen as a safe haven for investors, especially during times of uncertainty. However, recent data shows that gold might be lagging behind where it should be in terms of value. Over the years, several factors have influenced the price of gold, but when we look closely, gold seems to be significantly underpriced when compared to . . .

Glide path for India is clear

India is currently the fifth-largest economy in the world in terms of nominal GDP. As of now, the United States, China, Japan, and Germany are ahead of India, with the U.S. and China significantly larger. While it’s tempting to compare India with China, it’s important to understand that China’s economy is . . . .

Staying with right sectors

Over the past five years, certain sectors in the market have seen incredible growth. From October 2019 to October 2024, there has been a significant shift in which sectors are leading the market. The Nifty Realty sector stands out with the highest performance of . . .

WeekendInvesting Specials !

How can 1% Extra Returns create a massive impact on overall corpus ?

On Sundays, we do special episodes backed by a lot of data, and we try to find insights using that data. This and more will be available on the Weekend Investing app, which you can get on Google Play and the App Store.

Markets this week

It has been a tough week for the markets, with widespread turmoil and a sentiment of desperation. Although the market has only corrected by about 10% from its highs, many investors, especially those who haven’t experienced significant corrections before, are feeling deeply unsettled. The Nifty experienced a complete breakdown this week. Starting near 24,100, it has seen a steep decline, losing over 600 points, or more, on the weekly chart. Out of the last seven weeks, six have been in the red, with only one week of consolidation. This rapid decline is unsettling, but as long as the market stays above 21,300, the overall uptrend remains intact. Below that level, we could see the trend breaking, leading either to sideways consolidation or further downward movement.

The current correction is in line with previous market corrections that typically happen every six months. A sharp correction occurred on election day, and this is the follow-up, coming about five months later. So, while it may feel dramatic, it is not entirely out of the ordinary. Over the last four years, we’ve become accustomed to frequent new highs, but markets don’t always reach new peaks so often. Despite the current 10-15% drop from recent highs, we’re still sitting about 50% higher than where we were a year and a half ago, which is a positive long-term perspective. It’s important to remember not to focus only on short-term portfolio losses but also to keep a broader, long-term view, especially if you’ve been in the markets for several years.

Benchmark Indices & WeekendInvesting Overview

Looking at the financial year so far, despite recent sharp losses, the overall market remains in green for FY25. However, this past week saw significant declines, with the Nifty 50, CNX 200, and CNX 500 dropping between 2% and 4.6%. The small caps 250 index was hit the hardest.

In the WeekendInvesting strategy space, all strategies saw cuts ranging from 2.4% to 6.4%. While many strategies faced losses, some, like HNI Capital Compounder and Mi Evergreen, managed to outperform their benchmarks. Others, such as Mi India Top 10 and Mi 25, experienced dramatic declines. Mi MT Allcap, interestingly, has moved to over 40% cash, which could prove beneficial if the market continues to fall. Shifting to cash or defensive stocks only shows its alpha during deeper market corrections, so while strategies may fall with the market initially, the real outperformance may emerge if the market drops further.

Sectoral Overview

Among sectors, only the IT sector delivered positive performance, up 4.9% for the week and a strong 21.5% for FY25. The outlook for IT stocks has changed dramatically over the past few months. In contrast, private banks were down 1.6%, the Bank Nifty lost 2%, and the Auto sector fell 2.8%. The biggest surprise was FMCG, which was down 5%, despite experts’ positive outlook on the domestic growth story. PSU banks also suffered a sharp decline, down 4% for the week and 7.3% for FY25. Overall, we are heading into a year where even if the market ends with modest gains or losses, say within a 10% range, it wouldn’t be unreasonable considering the stellar performance of the past few years. After every few great years, it’s natural for markets to experience a period of stagnation or pullback.

In terms of sectoral momentum rankings, IT remains at the top across all timeframes, followed by financial services and banks. Sectors like pharma are also doing well, but most others, such as energy, PSU, FMCG, commodities, metals, and autos, are near the bottom. Money is clearly rotating out of these sectors, and foreign institutional investors (FIIs) have been pulling funds from the market. Newer market participants, who haven’t experienced corrections before, may panic and sell early, adding to the volatility. It’s worth noting that, according to official data from the Association of Mutual Funds, the average mutual fund investor stays in the system for no more than 1.5 years. This short-term mindset often leads investors to use last year’s returns as a benchmark for this year, without realizing that markets should be viewed over a 5-10 year horizon. Only by taking a longer-term perspective can one truly appreciate the ups and downs of the market.

WeekendInvesting Strategy Spotlight

The Need for Patience . .

In the spotlight this week is the need for patience. As someone with 30 years of market experience, I can attest that patience and adherence to your rules are crucial for success. A case study is the stock Mazdock, which has seen an incredible rally from 200 rupees in mid-2022 to nearly 6,000 rupees over the last two years. Many may have hesitated to buy when it doubled from 200 to 400, thinking it had already gone up too much. But those who followed their rules would have benefitted from at least part of this massive rally.

For example, in the Mi 35 strategy, Mazdock was bought at 354 rupees and sold at 2,193 rupees when it exited the small-cap space and was reallocated to mid-caps. While the stock went up 25 times overall, the strategy still made a respectable 6x return. The key takeaway is that you don’t need to capture the entire trend. As long as you capture a portion of it and let your winners run while cutting your losers, you will still come out ahead. It’s a game of probabilities, where some stocks will do exceptionally well, some will perform in line with the market, and others will underperform. But collectively, the portfolio should deliver better-than-market returns.

When thinking about the market and your portfolio, it’s important to take a holistic view. The performance of any single stock, whether it’s Mazdock or another, doesn’t matter as much as the overall performance of your portfolio. With a few strong winners and a number of smaller losers, the combined result should be a market-beating return. That’s the expected outcome, and that’s what happened in this case.

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. A backup email is sent by mid-day Monday if you have not rebalanced by then and yet another one a

Note: We are not including LIQUIDBEES as an ADD or an EXIT count.

WeekendInvesting Strategies Performance

WeekendInvesting Products – LIVE Index Data

Many of you had asked us to make the index series of all WeekendInvesting Products available so that you could perform your own analysis and studies. You can find a link to the LIVE sheet here and also on the HUB under the support column in the content tab.

Disclaimers & Disclosures