Where is the market headed?
It was a good start to the month with Nifty and other parts of the market rallying. This came despite the US government shutting down.
Now what does a US government shutdown mean? It basically means that all non-essential activities of government agencies in the US stop functioning. Non-essential workers stop getting paid, no new recruitment happens, and parks along with other public facilities that are not critical get closed. In the past we have seen many such shutdowns. Almost always, both sides of Congress eventually meet and raise the borrowing limit of the US government.
This cycle keeps repeating, almost like having an endless credit card where the limit gets extended every time it is reached. The Democrats and Republicans agree to raise the borrowing by a few trillion dollars and then wait for a few more months before facing the same problem again.
The last shutdown was during Trump’s presidency, and in fact three shutdowns happened under his term. For the last six years there hasn’t been one. But just because previous shutdowns did not cause much damage does not mean this one can be ignored.
With the current administration being rigid and inflexible, if they don’t compromise, the government may not function properly. That can easily lead to a major disaster. Economists have warned that GDP could drop by 0.2% each week if the deadlock continues.
Market Overview
Looking at the Indian market, after nine days of red candles, Nifty posted a strong green candle with a 0.92% rise, closing above the two-day high at 24,836. This is a positive sign that the move may be more stable going forward, though of course there are no guarantees.
Nifty Next 50
Junior Nifty was up 0.36%.
Nifty Mid and Small Cap
Midcaps rose 0.86%, Smallcaps gained 1.06%.
Bank Nifty
Bank Nifty rallied 1.3%. The RBI’s recent announcements, while not cutting interest rates, have eased conditions and increased liquidity. One big step was raising the loan-against-shares (LAS) facility limit from ₹20 lakhs to ₹1 crore. This change will allow more people to borrow against shares, increasing market activity and liquidity in the economy.
GOLD
Gold prices also moved higher by 0.67%, trading around ₹11,752 per gram. With the US shutdown creating uncertainty, gold may touch $4,000 if the deadlock persists, from the current level near $3,890.
Advance Decline Ratio
Market internals were strong, with 365 advances against 135 declines.
Heat Maps
Private banks like Kotak, Axis, ICICI, and HDFC performed well. Tata Motors rallied 5.6% after its demerger announcement. Sun Pharma, Adani Enterprises, and several other stocks also had strong sessions, though PSU banks, steel, and cement stocks faced some losses after their recent rally.
In the Nifty Next 50, Adani Group stocks surged again. United Spirits, Naukri, IRFC, PFC, and REC also gained on hopes of infrastructure status and lower borrowing rates.
Mover Of The Day
The mover of the day was Nazara Tech, which jumped 9% after reporting strong sales growth. Concerns about management efficiency still remain, but for now sales numbers supported the stock.
Tata Motors too had a sharp move on the demerger news.
Sectoral Overview
Across sectors, media stocks led the gains at 3.97%, with Nazara and Sun TV shining. Private banks gained nearly 2%, Defense Stocks 1.6%, Capital Markets 1.5%, Financial Services 1.3%, Pharma 1.39%, Real Estate and Services around 1% each. PSU banks, which had been running strongly over the past week, cooled off slightly with a 0.37% decline.
Sector of the Day
Nifty Media Index
U.S. Market
In the US, markets were positive in the last session with the S&P 500 up 0.4% and Nasdaq up 0.3%. Over the past week, US indices are higher by about 1%, except Small Caps.
Pharma names like Pfizer, Merck, Eli Lilly, Danaher, and Thermo Fisher have been running strongly there.
Tweets Of the Day
In the tweet of the day, Ashish Nanda highlighted a statement by Nithin Kamath of Zerodha, who said that their revenues could fall by 40% this year. This is due to declining option volumes and rising margins on options. If discount brokers face such revenue drops, it means exchanges and other intermediaries will also be impacted. A 40% decline is very significant and could hurt listed companies in this space, so investors need to be careful.
Between January and October of that year, many large-cap stocks crashed 30–90%. Even by 2012, many of them had not recovered. Unitech was down 96%, Suzlon 95%, RComm 90%, DLF 83%, ABB 65%, and even SBI was 31% down. This shows the importance of having a clear strategy during a crash. Not all stocks recover. Each crash brings new winners, and the same stocks do not always bounce back. You must rotate into sectors that will recover.
