Weekend Investing Daily Byte - 1 Jan 2024

How are the Markets Looking ?

Welcome to the Weekend Investing Daily Byte for January 1, 2024! I hope you all had a fantastic New Year’s celebration and are ready to kick off the year with a bang. As we begin this new year, I am filled with optimism and excitement for what lies ahead. I firmly believe that each year brings new opportunities for growth and prosperity.

In the world of investing, it’s important to maintain a positive outlook and brush aside any pessimism or negative forecasts. Over the years, I’ve noticed that both positive and negative forecasts often prove to be inaccurate. Therefore, it’s crucial to be prepared for whatever comes our way and accept it with open arms.

Taking a look at the Nifty, we’ve experienced two flattish days leading up to today, hovering around the 21,650-21,800 mark. Today, we reached a new intraday high of 21,840 but quickly retracted by 150 points. It’s worth mentioning that there was very little participation and poor volumes in the market due to the holiday season. Perhaps it would have been better to start trading from January 2 to encourage better participation from institutions and retail investors.

Nifty Heatmap

Despite the lackluster day, it’s important to note that there was no significant loss. The market seemed to consolidate with some give-up in the auto space. Mahindra and Mahindra lost 1.5%, Eicher Motors decreased by 2.5%, Bharthi was down 1.8%, and HDFC Bank saw a 0.6% decline. Other banks remained flat. On the positive side, Nestle, Coal India, Adani Enterprise, Adani Ports, and ITC experienced slight gains. Overall, it was a reasonably flattish to range-bound day.

Sectoral Overview

Looking at other sectors, the Nifty media segment made a move with a 1.78% increase, while oil and gas and PSU banks saw gains of 0.8% and 0.7%, respectively. However, there were no major significant moves observed.

Mid & Small Cap Performance

Moving on to mid caps, we saw a decent climb from around 46,200 to 46,400, indicating good momentum in this segment. Small caps also rallied from around 14,000 to 14,100, although there was some give-up in the last two hours of trading. The undercurrent in the mid and small cap segments remains strong, raising the question of whether mid and small caps will outperform large caps in 2024, or whether all segments of the market will experience a downturn.

When it comes to investing, it’s essential to consider these debates and projections carefully. However, it’s crucial to remember that no one can accurately predict the future of the market. In the past, some investors made the mistake of selling off all their small-cap investments in favor of large caps, only to regret their decision later. It’s impossible to determine how long a particular segment of the market will remain irrational. Therefore, it’s advisable to have exposure to various segments and stay invested for the long term.

Despite concerns about valuation, it’s interesting to observe that the US market has been sitting on the cusp of a recession for around 15 months, yet it has continued to reach all-time highs. This situation emphasizes that market movements can sometimes defy rationality. Over the long term, however, prices tend to find equilibrium.

Bank Nifty Overview

Looking specifically at the Nifty Bank, it closed slightly lower than the previous day, indicating some weakness in the banking sector. This weakness could potentially lead to an overall market decline in the coming days. Nevertheless, the market as a whole remains reasonably strong.

Highlihgts – PSE

Several public sector enterprise stocks, like BHCL, have experienced unexpected gains. These examples further demonstrate that liquidity drives the market, and fundamentals will catch up once the market recognizes the underlying reality.