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
Looking at the Nifty chart with the 50-day and 200-day moving averages, we notice that for the last two weeks, the index has been stuck in a tight 300–400 point range. While it did break below an important support level, there wasn’t the expected waterfall decline. So far, Nifty is “simmering” around this area. A move above 23,400 might bring back some confidence, but any drop below 23,000 could open up a “black hole.” Nifty was down by around 0.5% this week, and we did see the “Death Cross” (where the 50 DMA moves below the 200 DMA). There’s an earlier video discussing the Golden Cross and Death Cross, which explains the usual implications of these patterns.
Nifty – Weekly Perspective
On the weekly chart, it’s clear that the index has broken down from a previous bottom and the downtrend remains intact. There’s currently no sign of an imminent move higher, though markets can turn at any time. If Nifty continues lower or doesn’t bounce back, we could be looking at four consecutive months of decline (October to January), something that hasn’t happened since 2001. Such extreme market distress typically doesn’t last indefinitely, so a bounce might come soon—perhaps by February or March. A quick move above 24,000 could reverse the monthly trend, particularly if the market receives some positive news in the run-up to the Budget. Despite daily headlines suggesting potential tax cuts or rationalized slabs, these narratives haven’t yet sparked a recovery. From a worst-case perspective, the index might fall another 10% or so before consolidating, given the longer-term market average.
S&P 500 Overview
In contrast, the S&P 500 has continued to surge, rising nearly 2% this week and hitting another all-time high. It appears that investors expect big developments under the new U.S. president, particularly regarding manufacturing jobs returning to America. This breaks the usual correlation between Indian and U.S. markets, which can happen occasionally, especially when the U.S. dollar is strong and pulling capital away from emerging markets. Nonetheless, the rupee–dollar rate is trying to stabilize around 86–86.5. Since November 2023, the S&P 500 has rallied from roughly 4,000 to around 6,000, an incredible 50% jump fueled by liquidity rather than fundamental earnings surprises.
GOLD Overview
Gold in INR terms rose by about 2% this week, closing at roughly Rs. 81,300 per 10 grams. That’s up from around Rs. 52,000 in October 2023—a substantial 60% jump in under 15 months. This highlights gold’s significant returns and its role in providing portfolio diversification and a hedge. For those who have overlooked gold, the data alone makes a compelling case to consider it.
Dollar Index Overview
One of the more notable charts this week is the dollar index, which retreated by 2% and returned to its breakout point. If the dollar index breaks down further, Indian markets could benefit from renewed liquidity inflows. The index’s prior rally was largely a “buy the rumor” situation tied to anticipated U.S. policy changes. Now that President Trump is in office, we could be witnessing a “sell the news” event. Still, if the dollar index resumes its rise, emerging markets may remain under pressure. A break below this current pivot would be a positive sign for India and other developing economies.
Benchmark Indices Overview
In the benchmark indices, Nifty dropped only 0.5%, while the Nifty 500 fell by 1.6%. Midcaps were down 2.4%, with the Nifty Next 50 and small caps each losing around 4%. Over the past month, losses in the Nifty Next 50 stand at around 10%. However, if we shift our view to the one-year timeframe, returns remain in the green. It’s worth noting that markets generally don’t hit true extremes until one-year returns turn negative, and we’re not there yet. While the last six months are quite red, the three-year performance for midcaps and small caps still shows impressive CAGRs of 21% and 18%, respectively. Over five years, some indices, like the small caps, have returned about 25% annually. Given such robust long-term gains, a pullback was perhaps inevitable, and investors should keep a balanced perspective.
Sectoral Overview
Sector-wise, the IT sector fared well this week, rising 3.6%. Real estate, on the other hand, was hit hard, down 10–12%. Capital market stocks also fell, amid concerns of declining cash and F&O volumes, especially with potential lot-size changes from February 1st. Meanwhile, PSU banks and public sector enterprises saw no major rally ahead of the Budget, contrary to the usual pattern. Over a one-year period, only energy and media are in the red, whereas capital markets are still up by around 57%. At the three-year or five-year mark, several sectors show stellar gains (e.g., defense, which returned 49% CAGR over five years). Despite the current correction, these sectors have delivered massive upside. Investors should remember that strong rallies occur every few years, and the key is to be prepared by staying allocated across various asset classes.
Turning to the momentum score—calculated over one week, one month, three months, six months, and one year—IT ranks highest, with pharma also near the top despite some recent slippage. Services and FMCG have climbed up in the short-term rankings, partly because other sectors have declined more steeply. Meanwhile, oil and gas, public sector enterprises, and real estate have fallen further in these momentum calculations. The consistent strength of IT and pharma is notable, illustrating how these two sectors have maintained leadership amid broader market weakness.
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.
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.
