Where is the market headed?
It has been another stable day for the markets, closing on a positive note despite minor corrections throughout the session. Before moving forward, please ensure you read and fully understand the disclaimer provided.
Looking at the big picture, a crucial element to observe is the dollar index chart. For the last 15 years, the dollar has followed a steady upward trajectory, but it is now beginning to break that trend. The U.S. administration appears to be doing everything in its power to devalue the currency.
This engineered fall in the U.S. dollar is becoming very clear, especially as the U.S. calls on China to address its 1 trillion dollar annual surplus and asks the G7 and IMF to intervene. We are only at the start of this trend.
Historically, whenever the U.S. dollar falls, emerging markets and gold tend to perform exceptionally well. Investors should not make the mistake of thinking they have missed the move because commodities or equities are at high valuations.
Market Overview
The Nifty remained very flat today, up only 0.07%, but it is showing resilience by not giving up any gains and gradually inching upward. The last seven sessions have maintained an upward trajectory, and overall trends look positive.
Nifty Next 50
The Junior Nifty rose 0.5%, while mid-caps and small-caps remained flat at 0.02% and 0.13% respectively, recovering from intraday dips
Nifty Mid and Small Cap
Bank Nifty
Notably, the Nifty Bank closed up 0.2%, hitting a new all-time high.
GOLD
Gold is also at the cusp of a significant move, ending the day up 1% at 156. If we see a two-day high close by tonight, it will likely provide a new tailwind for the metal.
SILVER
Silver also looked strong, up over 5% at 262466.
Advance Decline Ratio
The advance-decline ratio was flat at 226 to 274, offering little to read into.
Heat Maps
The Nifty heat map reveals that IT stocks are being demolished. TCS is currently at an almost six-year low, hanging by a wire on a head-and-shoulders pattern; a breakdown here could lead to a very ugly fall. Infosys and the entire IT sector chart look horrible, reflecting a long-term stagnation that shows no signs of stopping.
Conversely, Eicher Motors saw a 6% gain on good numbers, Maruti rose 1.7%, and State Bank of India ran hard with a 3% gain. Losses were seen in HDFC Bank, Coal India, Hindalco, and ITC. This highlights a clear shift in which sectors are lagging and which are performing, with commodities like Vedanta, Hindustan Zinc, steel, and energy stocks picking up steam. Other gainers included Divi’s Labs and Britannia, while losers included LIC, IRFC, LTIM, HAL, ABB, and Gas Authority.
Mover Of The Day
TVS SCS was the mover of the day, surging 14% due to double-digit revenue growth, margin expansion, and strong performance in India and Europe.
Sectoral Overview
Sectorally, Nifty IT fell while Nifty Auto rose 1.3%, joined by PSU Banks and Pharma which each rose 1%. Real Estate also gained 0.63%. On a monthly basis, Metals lead at 10.6%, with CPSE, Capital Markets, and PSU Banks up nearly 8%. The weakness in IT is dramatic, with LTI Mindtree, TCS, Persistent, Coforge, and Infosys all falling sharply.
Sector of the Day
Nifty IT Index
Nifty Auto Index
U.S. Market
In the U.S. markets, the previous session saw significant drops for Charles Schwab, Intel, Intuit, Amgen, and Gilead, ranging from 3% to 7%. The NASDAQ fell 0.55%, the S&P 500 dropped 0.3%, and the Russell 2000 was down 0.35%. Within the NASDAQ 100, names like Costco, Walmart, and Amazon lost ground, while Intel lost the most at -6%.
Tweet Of The Day
There has been a lot of misinformation regarding Sovereign Gold Bonds recently, leading some to react negatively to changes in taxation. While the government clarified that SGBs are not tax-free if bought from the secondary market—a point of contention for many—the situation is not as regressive as it seems. If you hold secondary market SGBs for two years or more, you pay a 12.5% capital gains tax, similar to other long-term assets. This is not a reversal of a promise but rather a clarification of a previously existing void. SGBs remain highly liquid, with 20 to 50 crores trading daily, making the idea that they are illiquid incorrect.
When comparing SGBs to ETFs, SGBs offer a significant advantage for those willing to hold for more than two years. While ETFs provide long-term capital gain benefits after one year, SGBs provide an additional 2.5% interest per year, whereas ETFs often have an expense ratio around 0.8%. This creates a roughly 3.3% annual income gap in favor of SGBs. Over a five to seven-year period, this can result in a 20% difference in total returns. While ETFs are suitable for short-term trading, SGBs remain a great option for longer durations. To assist with this, a tool called SGB Analyzer can identify which series are trading at a premium or discount.
