Where is the market headed?
Small-cap stocks are performing reasonably well and are currently positioned just a percent and a half away from new all-time highs. The broader market appears to be calling the bluff of the U.S. president, whose actions may shock the market one day, only for the markets to bounce back over the next two days. This resilience stems from the understanding that the United States itself cannot afford higher oil prices, higher yields, or a stronger dollar.
These market shocks are viewed as negotiation tactics, and while some form of skirmish will likely continue in the Middle East without ever becoming completely peaceful, India needs to make the best of the prevailing situation.
Market Overview
Meanwhile, the Nifty remains a bit far from its all-time highs because heavyweights like IT and banking stocks carry significant weight in the index. However, the broader market, driven by mid caps and small caps, is nearing historic peaks.
Friday, the 10th of July, marked the end of a tumultuous week. Investors are reminded to fully read the disclaimer as always. Over the final two days of the week, the market achieved a near-full recovery from the major drop experienced on Wednesday, even though the Nifty did not fully bounce back.
Broader Market Indices
On this final trading day, the Nifty finished up by 1.02 percent, while the Nifty Next 50 advanced by 1.2 percent. Mid caps and small caps both gained 1.3 percent, and the Bank Nifty climbed almost 1.4 percent.
Heat Maps
The market heat map revealed big names leading the rally, with Reliance rising 2 percent and State Bank of India up 1.3 percent. Other major gainers included Axis Bank, Bajaj Finance, L&T, Adani stocks, steel and cement stocks, IT stocks, and certain automotive companies.
The Nifty Next 50 heat map was also heavily painted green, with strong performances across Adani stocks, real estate, auto, defense, capital goods, and capital goods sectors. Looking at individual stocks, the top gainers for the day included Godrej Industries up 16 percent, Zensar tech up 13 percent, Indian Bank up 10 percent and Shopper Stops up 8.2 percent.
Conversely, the losing side featured Sun Pharma down 4.6 percent, while Page Industries, kaynes Tech, Gujarat Ambuja Exports, and Zee Entertainment all registered losses between 2 and 3 percent.
Top Gainers & Losers
Sectoral Overview
Sectoral trends showcased a highly favorable distribution with absolutely no sector ending the day in the red. The pharma sector remained almost flat, but real estate recorded a massive 3.5 percent single-day move. PSU Banks advanced by 3 percent, and IT stocks climbed nearly 2 percent. Over the course of just this single week, real estate stocks jumped up 22 percent. This is particularly remarkable given that many market observers were calling real estate a dead sector after its previous run-up.
Sector of the Day
Nifty Realty Index
Real estate has now effectively made up all its lost ground from the past year to sit at nearly 0 percent for the entire year, positioning itself as the leading sector for the month moving forward. Within the real estate space, companies like Brigade, Godrej, DLF, Prestige, and Aditya Birla Real Estate all performed remarkably well.
Nifty PSU Bank Index
PSU Banks also mounted a very smart comeback, led by Indian Bank rising almost 10 percent, Bank of India and Union Bank climbing nearly four and a half percent each, and Central Bank and Canara Bank gaining 3 percent each.
U.S. Market Update
Looking at international markets, the previous session for the US markets ended on a positive note after a flat start for the Dow Jones. The S&P 500 rose 0.8 percent, and the Nasdaq surged smartly once again by 1.6 percent.
Over the last month, the Nasdaq has moved into green territory at plus 0.95 percent, rebounding after reeling under a lot of pressure for several weeks to break even. Over the last year, the Nasdaq is now up 30 percent, while the Russell index has gained 34 percent for that market.
The top gainers in the US included Lumentum up 11 percent, alongside ARM Holdings, SanDisk, Astera Labs, and Lam Research. It is worth noting that some of these stocks could be part of the US Weekend Investing strategy, though these are not explicit recommendations. On the losing side, small and minor losses were observed in Costco, Alnylam Pharma, PepsiCo, Exxon Enterprise, and Diamondback Energy.
The broader US market space showed immense strength among big names in the semiconductor and AI sectors. SpaceX moved up a little bit, Meta gained 4.7 percent, Tesla rose 3 percent, and LRCX surged 6 percent. Amazon also closed higher, while Google and Nvidia remained flat, culminating in an overall very good day for the US markets.
The Nasdaq 100 heat map also showed good gains in AVGO (Broadcom), NVIDIA, Cisco, and several other stocks across the semiconductor and AI space. However, SpaceX continues to go down, and Tesla, Microsoft, Meta, Google, Amazon, Palantir, and Netflix all lost reasonable ground.
Tweet Of The Day
The tweet of the day focused on silver ETF capital flows, highlighting insights from Octavia Costa. The silver ETF 100-day rolling change in ETF assets recently dropped to 53 percent a few days ago. The last time outflows of a similar magnitude were observed was near the market lows of the COVID pandemic.
This indicates that silver is currently undergoing extreme pessimism and is potentially near some sort of intermediate or long-term bottom. Because a long-term bottoming process is a gradual phase rather than a single-day event, signs indicate the market is coming very near to that turning point, making silver an asset to watch closely on that front.
