The market just refuses to go up. Today, most of the day was spent in the green, but by the second half of the day, everything got washed out, causing tremendous pressure on the markets. The market is eagerly awaiting some good news, possibly from President Trump’s meeting with Prime Minister Modi, which seems to be where the hope lies right now for a turnaround. However, things look quite oversold and bleak.

Tomorrow is Valentine’s Day. Have you chosen your valentine wisely in the stock market? We’ll look at some stocks that have really been loved by investors, and some that have not made it to that list.

Where is the market headed?

Market Overview

The last two sessions have been quite volatile. Yesterday’s session saw a recovery from the bottom during the day, and today, the entire day’s gain was wiped out in the second half. The market is extremely indecisive right now. The good part is that it hasn’t just plummeted like a waterfall, but that scenario is still not ruled out. As long as the current bottom, which seems to be a double bottom for now, holds, there is some hope. However, the situation is still hopeful rather than confident. We are now in the fifth month of the market’s fall, with February being quite weak. Historically, there’s only one instance in the past 30 years where there were five consecutive down months. Even during the 2008 crisis and the Covid crisis, we did not experience five down months in a row. Though the declines this time have been relatively shallow, the question remains: what happens in the sixth month if we indeed see five consecutive down months? The probability is that either the market will turn around in February itself, or March might see an uptrend.

Looking at the Nifty, it’s been flat.

Nifty Next 50

The Nifty Junior also remained almost flat, breaking out above yesterday’s high this morning but failing to maintain that gain.

Nifty Mid and Small Cap

Mid-caps are flat, with a slight increase of 0.16%, and small caps are still struggling, closing just below a 0.1% gain. Small caps have now been down for six days in a row. There’s some buying coming in, but it’s not enough to spark a significant recovery. Overall, the market sentiment remains weak.

Nifty Bank Overview

Nifty Bank is down by 0.24%. No significant positive news has come through yet.

GOLD

On a brighter note, gold has risen another 0.4%, pushing it closer to an all-time high, with a weekly close expected near ₹86,000, which is remarkable for just two months of price movement.

Advanced Declined Ratio Trends

In the advanced decline trends, most indices saw declines outnumbering advances. The Nifty 500 had 267 declines versus 230 advances, and the Nifty 50 was evenly split. Nifty Bank had 9 declines versus 3 advances, with mid-caps and Nifty Next 50 slightly positive. The overall market sentiment was quite balanced, though leaning towards the negative

Nifty Heatmap

Stocks like Bajaj twins, Sun Pharma, Tata Motors, Cipla were among the winners, while IT stocks, including TCS, Infosys, and Wipro, were down, possibly due to fears of a tariff situation affecting them. HDFC Bank and State Bank also saw declines in the Nifty Next 50. However, finance companies performed well, likely due to hopes that further rate cuts might be on the horizon now that inflation appears to be under control. Stocks like Gas Authority, NHPC, BHEL, HAL, and others performed well.

Sectoral Overview

In sectoral trends, pharma moved well today, up 1.4%. It has significantly recovered from where it was till yesterday, with a minimal decline of only 2.6% for the week. Pharma has been one of the better-performing sectors over the last six months as well. Real estate and metals saw a slight recovery, each up 0.8%, while public sector and media sectors rose 0.5%. On the downside, capital market stocks continued to bleed, down 0.6%, while FMCG, PSU banks, and IT stocks were also down, with IT stocks leading the decline at 1%. However, IT stocks are up 6% over the last six months. Capital market and defense stocks remain the biggest gainers over the past year. For the past week, all sectors have been down, with no green on the weekly chart. A bounce is certainly expected soon.

Sectors of the Day

Nifty Pharma Index

In the pharma sector, stocks like IPKA, JB Chem, Mankind, Sun Pharma, Aurobindo, and Lupin saw gains, and this trend is continuing. However, the overall trend is still down for many stocks.

Story of the Day : choosing your valentine wisely.

We will use the concept of drawdown as a metric to understand how to avoid weakness and stay close to strength. The desired mental space for investors should be to avoid weakness and look for strength, especially for momentum investing. Drawdowns, which most investors don’t fully appreciate, are an important concept. A stock that falls from ₹100 to ₹70 versus one that falls from ₹100 to ₹50 or ₹30—these two recovery paths are vastly different. The faster and steeper a stock falls, the more it signals weakness, whereas stocks that fall less tend to signal strength.

For those unfamiliar, drawdown measures the fall from the peak. If a stock goes from ₹20 to ₹100 and then falls to ₹50, the drawdown is 50%. We will look at the drawdowns of four indices: Nifty, Nifty Next 50, Mid Cap 150, and Small Cap. We’ll also examine how individual stocks within each of these indices perform relative to their benchmarks.

Starting with Nifty 50, the current drawdown is 11.5%. While this isn’t alarming on its own, it’s important to note that Nifty has only dropped 11.5% so far, compared to a 70% drop in 2008. The Nifty chart isn’t looking great with a death cross, lower lows, and lower highs, but in absolute terms, we’ve lost only 11.5%. Of the 50 stocks in Nifty, 11 have done better than the Nifty benchmark, and 39 stocks have fallen more than the average Nifty drawdown. The average drawdown of all stocks in Nifty is 20%, with some stocks down as much as 52%. There are a few stocks like Bajaj Finance, Bharti Airtel, and ICICI that have performed better than the benchmark.

Moving to Nifty Next 50, the drawdown is much steeper at 21%, which is worse than Nifty. There’s a significant difference in the volatility between Nifty and Nifty Next 50, and the trend is still down. 78% of stocks in this index are down more than the average drawdown. Stocks like Divi’s Lab, Bajaj Holding, and Naukri are stronger than the benchmark, while stocks like Adani Total Gas, Adani Green, and PNB are among the worst performers.

The Mid Cap 150 index has a 15.7% drawdown, which is surprisingly less than the Nifty Next 50. However, 91% of the stocks are weaker than the benchmark, and the average drawdown for stocks in this index is 34%. Some stocks like Muthoot Finance, JK Cement, and Abbott are stronger than the Mid Cap 150 benchmark, but the majority of stocks are significantly weaker.

In the Small Cap index, which is down 19%, only 10% of stocks are outperforming the benchmark. The average drawdown for stocks in this space is 39%. There are some stronger stocks, such as Reddington and AstraZeneca, but the majority are weak, with stocks like Suzlon, Bandhan Bank, and MMTC among the biggest losers.

The key takeaway is that by avoiding the worst-performing stocks and focusing on the stronger ones, investors can save themselves from a lot of pain. This approach is similar to Valentine’s Day: don’t get “married” to stocks that are weak. It may sound funny, but staying too attached to underperforming stocks can be dangerous. Like a bad marriage, holding onto weak stocks can lead to significant losses. As the analogy goes, you might be stuck in a deep ditch if your stock has fallen too much, and recovering from such a loss is much harder. So, evaluate your stock positions regularly and avoid staying in weak ones. When a stock is no longer working for you, it’s better to divorce it than to hold on, just like a bad marriage.

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