Where is the market headed?
The IT stocks were smashed like nobody’s business today. This marks the second time a smash like this has happened recently, with the earlier one occurring just a few days ago. As the saying goes, there is never just one cockroach in the cupboard. Once a stock or a sector starts to fall, many people rush in to start buying because they feel they have caught the bottom, only for the next hammer to come through. It is always better to allow a stock or a sector to stabilize, stop falling, and start going up before buying. What is the rush?
Looking at the long-term charts of Infosys and TCS, the primary IT stocks, some interesting observations emerge over a 20-year period. The top green line represents TCS, the white line is Infosys, the third line is the Nifty, and the golden line is gold.
Over 20 years, Infosys has beaten everything hollow, performing much higher than the Nifty, TCS, and gold. TCS has also significantly beaten the Nifty in the last 20 years. Specifically, TCS is up 1,800% versus the Nifty’s 800%, while Infosys is up 1,000% versus the Nifty’s 800%. Despite recent falls, these stocks have performed very well over two decades.
Market Overview
Looking at the broader market, it came off a little bit, down half a percent. This is no big deal as the market is still digesting the big move it recently had and is consolidating near 25,800. There is certainly no rush to go up. A good sign is that FIIs have started to reduce their short positions on India and are beginning to nibble on equity cash market positions.
Nifty Next 50
Nifty Junior looked decent, down only half a percent today. Mid-caps were also down half a percent, and small-caps were down 0.7%.
Nifty Mid and Small Cap
Bank Nifty
Bank Nifty was absolutely flat, which is telling because Bank Nifty typically leads the market in either direction and currently shows no desire to go down.
GOLD
Gold is flat, down 0.34%. As the Chinese market enters a holiday for New Year celebrations, gold and silver will likely be very quiet until the fourth week of the month.
SILVER
Silver is down 0.88% and has gone flattish. It is healthy for both to consolidate and regain ground.
Advance Decline Ratio
Advanced Decline trends were flat with 129 advances to 371 declines.
Heat Maps
The heat map is stark red primarily due to IT stocks like HCL Tech, TCS, Infosys, and Wipro being smashed down. Reliance was also down. Interestingly, Bajaj Finance shared insights into how AI is turning around their productivity, which should provide a tailwind going forward.
On the Nifty heat map, BPCL, IOC, Divi’s Lab, LTIM, Ambuja Cements, and DLF all lost ground.
Mover Of The Day
The mover of the day was Avanti Feeds, which has been remarkably strong since the US deal, up another 18% post Q3 results and hitting new highs.
Sectoral Overview
Sectoral trends show Nifty IT has been smashed down by 12.7% in just the last month. Over the last year, it is the worst-performing sector at minus 21%. In contrast, PSU banks have seen a potential 52% gain. This highlights the enormous difference sectoral rotation can make to a portfolio, provided one has an agile strategy and an open mind about booking losses or exiting a favorite stock.
Defense and financial services saw marginal gains, but most sectors were down. The IT index has slammed down from nearly 40,000 to 33,000 levels in just seven sessions—a 20% drop. This is likely a decadal move involving a repricing of the sector rather than something that will see a V-shaped recovery unless these companies reveal major undisclosed R&D in LLMs, which is unlikely.
Sector of the Day
Nifty IT Index
Coforge, Tech Mahindra, Oracle, Infosys, and LTI Mindtree all lost significant ground.
U.S. Market
In the US, the previous session saw the Russell and Dow Jones down, while the Nasdaq rose 0.3%. IBM was smashed down 6%, and ServiceNow, Intuit, Salesforce, and Immersion were down 4 to 6%. Some of these stocks may be part of the Weekend Investing US stock strategy, but these are not recommendations, as per the disclaimer.
The S&P 500 remained flat, while the Nasdaq heat map was a mixed bag with Palantir, Netflix, Cisco, Google, and Amazon losing ground. MU was up 10% in a very volatile session for some stocks.
Tweet Of The Day
A featured infographic from Finshots (see the image below), sourced from the World Gold Council, breaks down the gold market dynamics. In 2025, the total supply was 5,000 tons, with 3,600 tons from mining and 1,400 tons from recycling. Of this, 33% (about 1,600 tons) goes to jewelry, dominated by buyers in China and India. About 7% (300 tons) is used in industrial applications like electronics due to high conductivity and corrosion resistance. Central banks now pick up about 800 to 1,000 tons annually, a significant increase from pre-2022 levels. Investment demand, including physical bullion and ETFs, accounts for 43% or 2,100 tons.
The most interesting part is that the 5,000-ton supply is not growing. There have been zero new mining discoveries in the last three years, despite rising prices which usually encourage exploration. Mine production only grows by 2% to 3% yearly. Furthermore, much of the demand from jewelry, central banks, and physical investment is sticky and does not easily return to the market pool. With constrained supply and strong demand, the direction of prices seems clear.
