Where is the market headed?
It was another day where markets were completely volatile, with the first half going up and the second half coming down. This volatility occurred even as the market is expecting a rate cut by the Fed tonight. It seems all that is already baked in, and the market is certainly not in a good mood going forward. The expectation was that an interim bottom would get made today ahead of the Fed meet, but the jury is still out. It doesn’t seem like the market is willing to show any strength in its move right now.
Looking at the market chart, this is the third day running where Nifty also has not been able to hold on. We are decisively in a short-term downtrend for sure, although how far down is not known. We’ve closed this gap that was available here, and the next pivot perhaps is somewhere near 25,300. So that’s sort of the natural next stop for the markets.
Market Overview
Nifty Next 50
Nifty Jr. was down 0.32% today. The dead cat bounce that started yesterday morning did go high, but today we failed to capitalize on that bounce and go further.
Nifty Mid and Small Cap
This is where the damage was more pronounced: mid caps have closed at a new few-months low. Yesterday’s gain from open to close was completely smashed down, with a 0.93% drop in mid caps and a 0.7% drop in small caps, which was also pretty damaging. We are potentially oversold. There was a bounce, but that bounce did not last. Now the next move, unless we cross these two days’ high, perhaps that is when the markets will start to get some strength and confidence.
Bank Nifty
Nifty Bank was also down 0.44%, although out of all indices, Nifty Bank still looks the most sane one out there.
GOLD
Gold is also slipping a bit, with the rate at 12,854 per gram. However, silver is climbing new highs, with the price for silver in rupee terms at 186,000. So, silver is actually leading gold, and that happens in a precious metals long-term rally. Gold dominates the first part of the rally, and then silver takes on for the next part, which has usually been seen.
SILVER
Advance Decline Ratio
Looking at the advance-decline ratio, you can see how in the first half advances were quite high and declines were low, and then suddenly there was a collapse. Advances kept on going lower and lower and lower. The bounce did not last, and you ended up the day with 156 advances to 344 declines.
Heat Maps
In the Nifty Heatmap, there were very few greens. Reliance was holding on at 0.49%. Tata Steel, Hindalco, Sun Pharma, ITC, and Bajaj Auto were some of the names holding out. TVS Motors and HDFC Life also showed some gains. There were losses in Eternal, Infosys, ICICI Bank, HDFC Bank, Bajaj Finance, Adani Enterprise, UltraTech Cement, and others.
In the Nifty Next 50 heatmap, we had losses in Bank of Baroda, IRFC, Swiggy, D-Mart, Naukri, Bosch, and several others. Some gains were seen in commodity stocks like Hindustan Zinc and Vedanta, as well as in Hyundai and Torrent Pharma, and Tata Motors along with Adani Ports.
Mover Of The Day
In the Mover of the Day segment, you had Wellspun Living go up 6.8%. Any stock that is showing relative strength versus the weakness in the market is worth keeping on your watch list if you are doing discretionary trading or investing.
Sectoral Overview
When we look at sectoral trends, the capital market segment has been beaten down by 2.3% today, which is certainly not good news. The capital market index of that sector is somewhat leading the market at all times, and hence one is wary when Nifty Capital Market is falling like this. Tourism was also down 1.5%, IT stocks 0.89%, and Defense, PSU Banks, Nifty Services Sector, and the Consumption story were also down.
On the gaining side, metals gained a marginal 0.4%, and media also gained 0.48%, along with Pharma, Oil and Gas, and CPSEs, all with very small gains. So primarily, we had most sectors on the down.
Sector of the Day
Nifty Capital Market Index
BSE, MCX, CDSL, Angel One, and Motilal Oswal were all smashed down in the capital market space.
U.S. Market
In the previous session on the US markets, you had a mixed bag. Dow Jones was down 0.4%, while Russell and NASDAQ were up 0.2% and 0.1%, respectively. So, it was a mixed-bag kind of situation there in terms of stocks. There were some big losses in JP Morgan at 4.6%, Boeing at 2.8%, and Verizon, Amgen, and Merck were also down. Some of these stocks could be part of the Weekend Investing US stock strategy, but these are not recommendations; that’s the disclaimer.
Tweet Of The Day
We tend to see only short-term movements and forget about long-term moves. The recency bias that we are all subject to means that during strong uptrends, we forget that the market will also come down, and during downtrends, we forget that markets can also go up. So this recency issue means that what we have seen in the very recent past—for context, perhaps the last one year, last six months, or last three months—has not been so great. But when the market was doing well, three, six months, and one year were looking really good.
The idea here is that one needs to avoid this short-termism in their approach and see what they have gained over a five or ten-year period. Imagine your portfolio five years back or ten years back and where it has come to today. If you have even a reasonable strategy, or even if you have invested in an index, that journey actually tells you what the usual journey of the market is. So, having that perspective is very, very important, and we can keep reminding ourselves that the longer perspective—especially for those who have been in the market for five, ten, fifteen, or twenty years—would know what kind of change they have seen in their portfolios over that period of time, unless they have really gone against the markets.
