Where is the market headed?
The market continues to exhibit a dullness and is in a completely disinterested state. No sector or part of the market is showing a willingness to move up.
The rupee, being at or around 90, has completely dominated the market narrative. There are significant rumors suggesting the US-India tariff deal is now on the back burner, particularly because President Putin is visiting India, and some major deals are likely to be signed with him. This is expected to further antagonize the U.S. team.
There are very few encouraging cues in the market. While emerging markets are generally receiving flows, India is suddenly slumping badly across all parameters. Foreign direct investment (FDI), Foreign Institutional Investor (FII) flow, and even overseas NRI flows coming into the country have not kept pace with the usual percentage gain.
Market Overview
The Nifty moved up by a marginal 0.18%, but the overall market sentiment remained very dull across the board.
Nifty Next 50
Nifty Junior showed a small gain of 0.23% after a big beating in the previous session.
Nifty Mid and Small Cap
Mid-caps were slightly negative at 0.04%, and small caps continued their fall at 0.24%. The small cap space is currently in a very critical zone. The 16,500 level has historically served as a support, and if it breaks, confidence in the small cap space will likely diminish for some time.
Bank Nifty
Nifty Bank was also completely flat, down 0.1%. The market is clearly searching for something to latch onto—a cue to hold on to—but none is currently available.
GOLD
Gold is slipping 0.26% to 12,877, and silver is dropping 1.81% to 176,000.
SILVER
USDINR
The USD/INR is retracing slightly from 90.43 to 89.94. Historical studies have shown that whenever the USD/INR starts to move, it moves by an average of about 18%. This time, we have already moved about 8%. It is just a guess whether we will see another 10% move, but if it does happen, the historical calculation suggests we could be sitting in the 95 to 100 zone sometime in the second half of 2026.
Advance Decline Ratio
The advance-decline ratio started with gains in advances in the first few hours but gave them up. By the end of the day, it was nearly even, with 228 advances to 272 declines.
Heat Maps
The Nifty Heat Map looked reasonably green today after the complete washout yesterday. IT stocks continued to run up on the expectation of a falling rupee. Some banking and finance stocks perked up, and energy stocks like ONGC, Coal India, and Power Grid did well.
Reliance was down 0.21%, but it is looking not so bad and is initiating the IPO process for Reliance Jio, which should provide a good boost in the coming times. Mahindra & Mahindra, Bajaj Auto, ITC, Sun Pharma, Bharti Airtel, and JSW Steel were among the stocks moving. Indigo was down nearly 3% due to the fiasco at Indian airports, likely stemming from a monopolistic situation where most flights are operated by Indigo and Air India (now private with the Tatas). On most sectors, there is a monopoly or duopoly, causing issues in the airline space.
The Nifty Next 50 heat map had some gainers, including LTIM, Naukri, HAL, ABB, Motherson, Siemens, Britannia, and Torrent Pharma. However, power stocks like Adani Power, Enrin, and JSW Energy, along with IOC, BPCL, and Bajaj Holdings, lost ground, resulting in a mixed bag for the Nifty Next 50.
Mover Of The Day
In the Mover of the Day segment, Hind Copper performed well, gaining 7.83%. This is because copper prices are rising, and the move that began in precious metals is gradually percolating down into other metal regions. Hindustan Copper is benefiting from rising copper and silver prices.
Sectoral Overview
Sectoral trends remain a mixed bag. IT stocks are gaining over 1.4% on the IT index. There was some comeback after yesterday’s drubbing in defense, real estate, FMCG, and CPSCs. This is most likely a reactionary gain in these four sectors and may continue on the downside if the overall market continues to fall.
Tourism stocks were down 1%, media stocks were down 1.45%, and energy stocks were down 0.34%, indicating not much action there. IT stocks like Coforge, Persistent, LTI Mindtree, Emphasis, and TCS are all doing well. Even a 10% move overall in the USD/INR is a big margin plus for IT stocks. Media continues to go down, with PVR, Tips Network, Zee Entertainment, and Saregama all losing ground.
Sector of the Day
Nifty IT Index
Nifty Media Index
U.S. Market
In the previous US market session, the Russell 2000 performed very well, up 1.8% to 1.9%. The Dow Jones was up 0.86%, and the S&P 500 and NASDAQ also saw minor gains. The US market is showing great strength. Bristol Myers Squibb, UnitedHealth, Accenture, Texas Instruments, and Tesla were the big gainers. Some of these stocks could be part of the Weekend Investing US stock strategy, but this is a disclaimer and not a recommendation. US markets have done reasonably well this year, while Indian markets have basically gone flat.
Tweet Of The Day
In the tweet of the day segment, a very insightful tweet from @normal_2610 discussed the Indian rupee. The core problem, he suggests, is that India wants foreign money but only on its own terms, and big global capital is deterred by that uncertainty. India consistently spends more dollars than it earns, and this core problem is not being addressed. We import significantly more, especially oil and gold, and when the rupee weakens, our import bill explodes.
Unlike China, where currency management is a pure economic decision, the rupee’s strength in India becomes an emotional, political, and nationalistic debate. Right now, a comparison with China is difficult because China currently has a great trade surplus.
The weird thing is that the dollar itself is weak globally, declining versus other currencies, but the Indian rupee is declining versus the dollar, meaning the Indian rupee versus other currencies is in an even worse situation than versus the dollar.
US tariffs are hitting Indian exports, causing FPI money to run away fast, and FDI is also slowing. Many foreign investors have booked profits via IPOs, and that money is sitting outside, waiting for the rupee to correct as much as it will before they bring it back in.
The anticipated China-to-India trade money is actually moving from India to China or elsewhere. Gold and silver imports are shooting up because people are scared and buy gold when they don’t trust the currency. ETFs also need to import real gold, adding more pressure. Normally, capital flows cover India’s huge trade deficits, but now flows are negative. The NRI flow, FDI flow, and FII flow are collectively offering no protection for the rupee.
A behavioral loop has been triggered where exporters are now waiting for the rupee to get cheaper so they can book their dollar earnings, while importers are rushing to import because they fear higher costs later. This becomes a self-fulfilling cycle unless the central bank steps in to calm the situation.
A weak rupee has some great advantages for exports, as they become cheaper, and remittances become stronger. However, this self-feeding loop needs to be stopped, or whatever has to happen should happen very quickly. The government also likes a weak rupee because nominal GDP jumps, making tax collections look bigger, and the debt-to-GDP ratio improves. But the downside is imported inflation: oil gets expensive, input costs rise, and the whole economy feels the pinch.
India wants foreign money but only on its terms, which is the problem. For two years (2022-2023), we prevented the rupee from falling while all other currencies were falling against the dollar, and that piled-up pressure is now coming out as a single large move.
As an investor, the key question is how to arrange money, skills, and assets to avoid paying this invisible tax. We are already paying direct income tax, indirect income tax, and the hidden tax of inflation. The weakening rupee is the fourth level of taxation, which is basically our ability to buy global products and services going down. Your purchasing power is falling, and you are paying this fourth tax as well, so you need to be set up for that.
Another tweet, from Sandeep Sabharwal, suggests that the government can relax the capital gains tax to encourage some inflows, and I totally agree. We lost the plot last year when we increased the long-term and short-term capital gains tax. While this did not significantly impact the total amount of tax the government received from the markets because the markets were not doing well anyway, it mentally creates a resistance in the minds of foreign investors. If they have ten countries as options, and one country says it wants more tax from them, that becomes a hurdle, and they will go somewhere else. Indian investors, of course, have no choice and are stuck with Indian stocks and Indian taxation, but foreigners have a choice, which is likely causing this resistance.
The government must realize that for India to do well, the capital markets have to perform very well. The new capital that comes to the market via IPOs, FPOs, and foreign portfolio investment is essentially like “grease” for the economy. The more grease you have, the smoother the engine will run.
We must also remember that we are still in a very nascent phase where Indian households invest only a few percent of their savings in the markets, investing much more in insurance and fixed deposits. We need to encourage more companies to come to the markets, list, and create a wider ecosystem for newer promoters to emerge, and more paper to be available for subscription and investment. In our current life cycle of growth, it is too early to curb these activities with unnecessary resistances like Securities Transaction Tax (STT) or higher capital gains.
