The WeekendInvesting Newsletter 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.
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Nifty on the Daily Chart
Markets are breaking out, conflicts seem to be winding down, at least for now, and there are no tariff swords hanging over our heads. Essentially, it has been a very peaceful week where the market is trying to find its own natural stride based on the flows. Both domestic and foreign flows have been positive, and the market is working toward establishing a new equilibrium.
Looking at the Nifty, the last five sessions have all been up. There was one profit-taking session, but even that closed higher, leading to a gain of over 2% for the week.
Nifty – Weekly Chart Perspective
The weekly chart is looking very strong. We are now just a stone’s throw away from the all-time high, which is largely academic at this point. The rally is clearly on, and only a break of 24,400 — the base established earlier — would signal a break in the current trend. Any other levels would still be considered part of the ongoing upward trend.
Going forward, we’ll need to watch for where the market establishes a new pivot and whether it continues upward. It may stall somewhat at the previous all-time high and consolidate, much like it did for almost six weeks previously, or it could move straight up. However, if we drop below 24,400, that could be the point to watch for a potential short-term downtrend.
S&P 500 Overview
The S&P 500 has also moved up to a new all-time high, gaining 3.44% this week. Tech stocks are once again leading the rally there. It’s quite remarkable that in an economy where there’s hardly any growth and ongoing debates about interest rates — with the president wanting cuts while the Fed remains cautious — the U.S. market has hit a new high. This kind of movement suggests that easier monetary policy might be on the way and that the next Fed chair might be more aligned with the president’s stance.
GOLD Overview
Gold, incidentally, was down this week by -4.06%. The easing of conflicts and some profit-taking appear to be weighing heavily on it. Yet, if you look at the trend, it remains very strong overall. There’s no significant issue with the long-term trend unless prices fall below ₹9,000 per gram. Currently, gold sits at ₹9,530.
Dollar Index Overview
The dollar index has also been falling. This week saw a sharp drop from 99 to 97. The USD/INR has appreciated, and if the dollar index continues to decline, it will ultimately be very beneficial for emerging markets and precious metals.
Benchmark Indices Overview
In the benchmark indices overview for this week, small caps led the charge, rising 4.29%. The Nifty Next 50 gained nearly 3%, mid caps were up 2.5% along with the Nifty 500, and the Nifty 50 rose by 2%. These are solid gains for the week. Looking at the last three months, small caps have surged 16.75% from the bottom, while the Nifty has gained 8.5%. Over the past year, returns are still relatively modest: 6.6% on the Nifty, 5.3% on mid caps, 4.8% on the Nifty 500, and 3.7% on small caps. The Nifty Next 50 is still down by -3.68%. It will likely take more time for yearly returns to improve meaningfully.
On a three-year basis, we are sitting on very healthy compound annual growth rates (CAGR). Mid caps have delivered a staggering 29%, far above the long-term average of around 15-18%. Small caps are also at 29%, significantly higher than historical norms. The Nifty Next 50 has returned 23%, the Nifty 500 is at 20%, and the Nifty 50 has achieved 17%, all well above their respective long-term averages of around 12%.
On a five-year basis, performance has been equally impressive. Small caps have clocked a phenomenal 33.58% CAGR, compared to a long-term average below 20%. The Nifty Midcap is also nearly at 30%, Nifty 500 at 22.5%, Nifty Next 50 at 21.8%, and the Nifty 50 close to 20%, compared to long-term averages under 12-13%. The last five years have truly been exceptional, and perhaps the next five years could be equally rewarding — that possibility cannot be ruled out.
Sectoral Overview
In the sectoral overview this week, real estate took the brunt of selling, down 1.9%. Defense also fell by 1.1%, and IT stocks were down 0.4%. These were the only three sectors to close lower this week. On the upside, the best-performing sectors were the capital market and metals, both up 4.8%. Materials and commodities also rallied, gaining 4%. Other notable gainers included oil and gas, infrastructure stocks, and tourism stocks.
In the sectoral momentum score ranking, the capital market now holds the number one spot across both short-term and long-term momentum scores. Infrastructure, financial services, and banks round out the top four ranked sectors. At the bottom of the list, FMCG remains the weakest performer, followed closely by public sector enterprises, central public sector enterprises, and pharma, all of which have continued to sink lower.
Interestingly, some sectors that previously struggled are now staging comebacks. For instance, metals are the top performer on a weekly basis, and commodities, tourism, and media are also making short-term gains. Meanwhile, defense is taking a back seat for now. Other sectors such as PSU banks and real estate have come back strongly in the last month.
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.
