Market Outlook
Looking at the chart, one might conclude it was a flat day in the markets, yet there was significant volatility. Observers of the market would notice a doji candle formation in the Nifty 50, indicating indecision. However, Nifty has been trading within an upward-pointing channel, suggesting a positive trajectory as long as it remains within this channel.
Banking stocks faced challenges, particularly on the Finn Nifty expiry day, leading to considerable volatility. The lower part of the channel serves as crucial support for Nifty, and as long as the pattern of higher lows and higher highs persists, the outlook remains positive, despite potential profit booking. The bullish phase from November to mid-January 2024 was notable, but recent activity has seen Nifty stagnate with increased selling pressure.
Nifty Heatmap
The heat map shows mixed results, with HDFC Bank notably supporting Nifty despite widespread losses across banks and energy stocks.
Sectoral Overview
The sectoral overview mirrors this, with IT standing out as a relatively strong performer amid general sectoral declines, including significant losses in real estate, PSU banks, and pharma.
Mid & Small Cap Performance
The mid-cap index has broken down from its supporting channel, raising alarms among investors in mid and small-cap spaces. This breakdown suggests caution, though a quick recovery could signal a failed breakdown and potential for a rapid upward move.
The small-cap index also showed critical movement, highlighting the importance of certain support levels for market stability.
Nifty Bank Overview
Bank Nifty, despite the day’s volatility, maintains a relatively stable outlook, with banking stocks generally performing well recently.
Nifty Junior
Nifty Junior’s recent loss contrasts with its consistent performance over the past months, still making it one of the better performers.
Pain of Discretionary Investing
This chart shows the difference in experiences between discretionary and nondiscretionary (momentum) investors, emphasizes the calmness and peace of mind afforded by nondiscretionary investing styles. Bank Nifty went 1.3% up and crashed after that in 2 minutes which is extremely painful and makes you question your own thesis.
Highlight
An examination of the Nifty to gold ratio in INR per gram illustrates the long-term outperformance of equities over gold, yet highlights the cyclical corrections in this ratio, reflecting the inverse correlation between Nifty performance and gold during times of market weakness. This inverse correlation is particularly notable during significant market downturns and rallies in gold.
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