Where is the market headed?
The markets opened quite dull today but saw a very nice recovery in the second half of the day, primarily on the prospects of improving Indo-US relations. The momentum shifted after President Trump tweeted that the two nations were “very close to a deal.” Regardless of the final outcome, the markets tend to react positively to such news. The first half of the day was more subdued, likely due to the impact of the Delhi blasts and the potential political implications of that event.
Currently, the quarterly results season is underway. Typically, during the results season, markets tend to get stuck within a defined range, preventing major swings. Once the results season concludes in the next few days, that is when the markets usually start their decisive move—either a jump or a drop—toward their next major destination. In other economic news, the upcoming inflation data is highly anticipated, and it is expected to remain benign.
Market Overview
Looking at the charts for the Nifty, we saw a very strong pattern today. The index experienced a sharp dip, breaching yesterday’s low, but then executed a strong pullback to close above yesterday’s high. This specific daily candle pattern—a breach of the previous day’s low followed by a close above its high—is typically a strong sign of strength. Furthermore, the Nifty has satisfied the first rule for any potential upswing by closing above a two-day high. This setup is reasonably satisfactory, and the index, which closed at 25,694, may be headed to retest its previous high soon.
Nifty Next 50
The Nifty Next 50 showed a similar dynamic: a very sharp drop well below yesterday’s low, followed by a reversal to close above yesterday’s closing, ending up 0.14%.
Nifty Mid and Small Cap
Mid Caps are also looking up, closing at a 3-4 day high, up 0.44%. The Nifty Bank is also strong, up 0.35% and closing at a multi-day high, potentially forming a flag pattern that could propel it much higher. Only Small Caps were holding back, closing down at -0.15%.
Bank Nifty
GOLD
Gold continues its upward trajectory, gaining 0.53% for the day and trading around 12,500 per gram. Silver also saw a good recovery, up another 1.1%.
SILVER
Silver also saw a good recovery, up another 1.1%.
Advance Decline Ratio
The Advanced-Decline ratio was favorable today. In the Nifty 500, declines were initially high in the morning but steadily decreased in the second half of the day as advances moved up. The final tally was 263 advances to 237 declines, which bodes well for the coming day.
Heat Maps
The Bajaj Twins (Bajaj Finserve and Bajaj Finance) were notably smashed down. However, the rest of the market looked quite green, with good performances from stocks like Indigo, BEL, Mahindra, HCL Tech, HDFC Bank, and ICICI Bank.
In the Nifty Next 50, Bajaj Holding was down 3.6% and Britannia was down 3%, while gains were seen in HAL (once again), Solar Industries, DMart, IOC, BPCL, Motherson, Mazdock, and Adani.
Mover Of The Day
The Mover of the Day was Poly Medicure Ltd., which ran up about 11% following the announcement of a ₹324 crore acquisition of an Italian company.
Sectoral Overview
The Nifty India Defense sector saw a huge jump of 2.4% today—a significant move as the sector was only up 2.3% over the last one month, meaning all of the one-month’s gains came through in a single day. IT was up 1.2%, and Autos rose 1%. PSEs, Consumption, Infrastructure, Metal, and Manufacturing stocks all gained between 0.7% and 1.2%. PSU Banks were the only losers, down 0.39%.
Sector of the Day
Nifty India Defence Index
The Defense sector’s strength is partly attributed to the start of Budget preparations, as the budget is expected to impact the defense sector in terms of allocation.
Strong performers in the defense move included MTAR Tech, Bharat Forge, Data Patterns, GRSE, and Dynamic Tech.
U.S. Market
US Markets delivered strong returns in their last session, with the S&P 500 up 1.5%, the Dow up 0.8%, and the Nasdaq up a significant 2.2%. This relief rally was sparked by the news that the US government shutdown is ending, as both sides of the Senate have agreed to cease the shutdown while negotiations continue.
US markets look quite good, with several stocks showing impressive gains: Palantir up 8.8%, Nvidia up 5.6% (showing no signs of stopping), Eli Lilly 4.5%, AMD 4.4%, and Alphabet 4%.
Tweet Of The Day
The Tweet of the Day highlighted a very interesting anomaly: people are sending remittances to India using USDT (Tether), a crypto coin. Because Tether is trading at a 4-5% premium in the Indian market, people are essentially getting more than the remitted amount (e.g., $104 for a $100 transfer) minus transaction costs, instead of the 1-2% deduction usually taken by banks.
The second tweet focused on gold charts. The weekly chart showed only two weak red candles, followed by a flat candle, and now gold is just 3% away from its previous highest weekly close. More significantly, if the month closes where it currently stands, the monthly chart shows gold is already at a new all-time high close. Given these charts, it does not look like gold is stopping anytime soon.
Just two weeks ago, everyone was calling the top of the gold rally at 4,400. If this new leg moves as strongly as the previous one, gold could potentially reach 5,000. For long-term investors focused on allocation, the specific entry price (e.g., buying at 3,800, 4,000, or 4,200) is less important than simply being allocated.
