Where is the market headed?
Two days after the so-called US-India deal, it has been announced that there is still work happening on the deal. It is likely that some parts of it will get closed in the next four or five days. So nothing is certain, no fine print is known, and the market also was not so happy on this news. The jump that the market did two days back has almost been half given away. Obviously, given the volatility of the narrative from the U.S., one never knows what will be the final outcome of that deal.
A tweet from Bull Theory highlights an absolute bloodbath in the markets in the last 24 hours. Gold dumped 5.5% wiping 1.9 trillion dollars, while silver dumped 19% wiping almost a trillion dollars. The S&P 500 dumped a percent with 580 billion gone, the NASDAQ saw 2.51 trillion gone, and the Russell 2000 was down 2% with 65 billion gone. Bitcoin dumped 8% for a loss of 120 billion, and total other crypto lost 184 billion. About 5 trillion dollars have been wiped out in the last 24 hours. This raises the question of whether this is a precursor of some news that is about to hit the global markets.
Market Overview
On the charts, the market shows an inside candle, which occurs when the top and bottom of the current range stays within the range of the previous session. This indicates an undecided or indecisive day where there is no clear direction. Overall, the short term and long term remain positive. Nifty and Nifty Junior both lost half a percent, but trends remain positive there.
Nifty Next 50
Nifty Mid and Small Cap
Mid caps lost 0.3% and small caps lost 1%, but none of these charts came down to fill the gap, which suggests strength in the market as it looks for more cues to go up.
Bank Nifty
Nifty Bank also rose Nifty Bank stayed at -0.29%.
GOLD
Gold dumped 2% today and silver was down 11.2%. Comparing the two, silver is already at the lows of the pre-first day’s crash, whereas gold is much higher. A divergence is happening where silver has had many speculators get onto the bandwagon and needs consolidation, while gold has deep buyers available to ensure a shallow fall.
SILVER
Advance Decline Ratio
Advanced decline trends favored declines today with 360 declines to 140 advances.
Heat Maps
The heat map is predominantly red. The Next 50 heat map showed big falls in metal stocks like Zinc and Vedanta, and PSU stocks like HAL and Gas Authority Limited. Bank of India is not yet falling off, so many oil stocks are gradually inching up.
Mover Of The Day
The mover of the day was Westlife, up 12.2%, as QSR stocks like Westlife, Jubilant, Devyani, and Sapphire have all been in demand and rallying.
Sectoral Overview
Sectoral trends were mixed, with minor gains in tourism and PSU banks, but bigger losses in defense, which was down 2%. Capital markets fell 1.3% and metals were down 1%.
Sector of the Day
Nifty India Defence Index
Defense is the first sector where the gap from the US deal day has already been filled, suggesting it is much weaker than other sectors. Stocks like Hindustan Aeronautics, Unimag, Data Patterns, MTAR, and Cyient all lost around 3% to 5%.
U.S. Market
In the US markets, there were big falls in AMD at 17%, Palantir at 11.6%, and Oracle at 5%. Lockheed and Broadcom were down about 4% and the Nasdaq was down 1.6%. Over the last 12 months, the Nasdaq is still up 14.3%, with the recent fall being only 3% over the last month. Some of these stocks could be part of the Weekend Investing U.S. stock strategy, though these are not recommendations. The US heat map is red, with semiconductor and chip stocks giving up gains. Even with fantastic results, Google was down 2%, Tesla fell 4%, and Meta and Amazon were also down.
Tweet Of The Day
There is a common thought lately asking if the gold rally is done and if investors should exit after gold went from 2,000 to 5,000. If gold was taken as a trade, a 150% gain in a couple of years is welcome, but gold should be looked at as insurance for a portfolio rather than just a trade. Even if there are zero returns in gold for the next two years, an allocation should remain in each portfolio. If a 1% scenario plays out where the world becomes even wilder, this hedge and insurance will really come into play. Do not look at gold for returns; look at it for safety. Gold is an allocation, not just a trade. If an allocation has shifted—for example, from 80% equity and 20% gold to 65/35 because gold doubled—it can be rebalanced back to 80/20, but one should not get out of it entirely.
