Where is the market headed?
The markets today were quite dull and slow, almost in a sulky mood. There was no major upswing anywhere, and it felt like the rally in precious metals was casting a shadow on the equity markets. Many people are now saying that the sharp rise in gold and silver prices could be an early warning sign that something might go wrong.
Historically, whenever gold and silver have moved up at such a fast pace, it has often been followed by some kind of financial disaster or recession, especially in the US. So, this trend is not looking very good for the equity markets, and there is some uncertainty about what could trigger a deeper sell-off.
Market Overview
Looking at the charts, the markets did not move much lower than yesterday. It could also be because we had four very good sessions before this. The Nifty was down 0.25%, showing that we are stuck in a range. There’s no big breakdown yet, but we are not moving up either. However, it is possible that the Nifty could attempt to reach its previous highs from July and September.
The Nifty Junior, however, was more meaningfully down. Yesterday, it looked like a flag pattern was forming, and now that’s exactly what’s happening. The last five to six sessions seem to have been a relief rally. If we break the recent low, we might go on to retest the previous lows. That’s the most negative case one could make right now unless we move above the pivot point.
Nifty Next 50
The Nifty Junior was down 0.77%, midcaps were down 0.73%, and smallcaps fell 0.54%. For the last three days, smallcaps haven’t been able to rise at all.
Nifty Mid and Small Cap
Bank Nifty
Nifty Bank was down 0.39%, so there were no major gains anywhere—except for gold.
GOLD
Gold was up 1.73% today, trading around ₹12,252 per gram or ₹1,22,525 per 10 grams, which is the more common way people look at it. If you see the trend from the end of August, it’s been just one and a half months, and gold has jumped from ₹98,000 to ₹1,22,000 per 10 grams—a gain of almost 25% in just six weeks. This is a very strong sign that something big is happening in the global order, and these sharp moves in gold prices are a reflection of that shift.
Advance Decline Ratio
Market breadth was flat after the first few hours, with 370 declines and only 130 advances.
Heat Maps
IT stocks managed to hold up well. TCS and Infosys were up between 1.8% and 2.5%. Titan also gained as gold prices surged. The company’s quarterly results came out strong, which was contrary to many expectations, and that pushed the stock up by 4.3%.
On the other hand, Reliance was down 1.2%, and auto stocks like Mahindra & Mahindra, Maruti, and Tata Motors also fell. UltraTech Cement, JSW, Sun Pharma, BEL, and NTPC were all lower, while Bharti Airtel gained 0.75%.
The Nifty Next 50 index was full of red. Stocks like ABB, Gail, Adani Power, DLF, and LIC were all slipping. Pidilite, BPCL, LTIM, and Eicher Motors managed small gains, but overall, things were weak.
Mover Of The Day
The standout mover was ITI, a PSU telecom company, which has gained 20% in a week as BSNL speeds up its 5G rollout. PSU stocks and the PSU index are holding their ground well, continuing their own strong trend.
Sectoral Overview
In the sectoral view, Nifty IT was the only sector that gained, up 1.5%. All other sectors were down. Real estate lost the most at 1.83%, while media, autos, and defense stocks were all down around 1.5%. CPSEs, PSUs, energy, and manufacturing sectors also fell about 1.5%. Over the last month, the picture has been quite mixed. Only PSU banks and defense stocks have held up.
Over the last three months, Nifty Auto, PSU banks, and Metals have shown some gains, but overall, it’s been a downward phase. Real estate, after a brief rally, is again seeing selling pressure, with Anant Raj, Oberoi Realty, Signature, Godrej, and DLF all down.
The IT index continues to do well, up 1.5%, with Infosys, TCS, Coforge, HCL Tech, and LTI Mindtree all moving higher.
Sector of the Day
Nifty Realty Index
Nifty IT Index
U.S. Market
In the US, markets were down slightly. Smallcaps fell 1.12%, Nasdaq dropped 0.67%, and the S&P 500 was down 0.38%. But on a 12-month basis, they are still doing very well. The S&P 500 is up 16.75%, and the Nasdaq has gained 25.3%—much stronger than Indian markets.
Among individual US stocks, Tesla was down 4.4%, Booking Holdings fell 3%, Nike dropped 3%, Texas Instruments was down 2.6%, and Oracle also slipped 2.5%.
Interestingly, one stock reportedly rose 2000% in a single day. There was a post on X (formerly Twitter) discussing how in India, our ASM and GSM rules prevent such moves, as we artificially control prices. In contrast, the US allows free price discovery, where a stock can move from $1 to $500 without restrictions. While it protects investors here, it might also limit their ability to benefit from such big moves.
Tweets Of the Day
There was an interesting tweet thread showing the timeline of the recent gold rally. It explained that after the US froze Russian assets in February 2022, countries realized that their reserves could also be frozen anytime. Many nations then started reducing their holdings of US Treasuries, and China began buying gold instead. Some hedge funds shorted gold thinking China’s buying would be limited, but China kept buying more. Later, as the US also started taking physical delivery of gold and Trump returned to the picture, a short squeeze began, sending gold prices up nearly 100% in two years. This could now lead to a sovereign event, hedge fund losses, or even a recession.
There was also a fascinating observation on Bitcoin’s cyclical pattern. From its all-time low in 2015 to its high in 2017, Bitcoin took 1064 days. Then it dropped from the 2017 high to the 2018 low in 364 days. From that 2018 low to the 2021 high, again, it took exactly 1064 days. And from the 2021 high to the next low, it again took 364 days, which ended on October 6th.
Based on this pattern, it was predicted that Bitcoin might peak around October 6th, and that’s exactly what happened when it hit a new high at ₹1,24,000. Now, the question is whether it will form a new low in the next 364 days. It will be interesting to see if this pattern continues.
