Where is the market headed?
Today’s discussion focuses on the hidden costs and impacts of war that are not immediately obvious. Often, when observing conflict, the quick conclusion is that if oil remains stable, everything will be fine. Unfortunately, the reality is not that simple.
Observations across many fronts show that second and third-order impacts of the war are already occurring. The first and most prominent is oil prices. The LPG crisis involves two main issues: availability and price, which constitute the first-order impact. However, the next hidden impact already starting to surface is inflation. Estimates suggest inflation will be rampantly high in the coming months.
Because energy serves as a raw material for almost everything created—from fertilizer production to LPG, petrol, and diesel—every commodity is likely to face a cost escalation in production.
Even raw materials for basic industries that are mined or produced require energy, and as energy becomes more expensive and its availability is questioned, costs rise across the board.
Worldwide fertilizer prices are already skyrocketing, and by-products like sulfur, used in numerous industries, are following suit. Many of these by-products will simply not be easily available, regardless of the price. Furthermore, if inflation continues to climb, the narrative that the US can cut interest rates will be thrown out the window. The expected regime change regarding interest rates, previously anticipated with the new Fed chair in May, is likely off the table due to high inflation.
Market Overview
Looking at the charts, the Nifty fell for a ninth day, losing about 2000 points or 8% to 9% during this crisis, landing closer to the 23,500 mark than its previous 25,500 level.
Nifty Next 50
In contrast, the Nifty Junior showed more resilience, recovering almost all losses to end down only 0.11% without breaking its three-day low.
Nifty Mid and Small Cap
Mid-caps and small-caps also sustained better than the Nifty, down 0.23% and 0.39% respectively, without breaking previous lows.
Bank Nifty
However, Nifty Bank dropped 1.4%, hitting a new recent low.
GOLD
Meanwhile, precious metals like gold, priced at 16,299, and silver, up 1.46%, are starting to perk up. Emerging markets may see relief once the dollar index falls from its recent high.
SILVER
Advance Decline Ratio
The advance-decline ratio was poor in the first half of the day but stabilized in the second half.
Heat Maps
The Nifty heat map showed significant losses in auto, finance, infrastructure, and cement stocks, while energy and power stocks saw some green.
Nifty Next 50 featured more gains, driven by PSUs and power stocks, even as real estate and some auto stocks were hit hard. NTPC was a major mover, rising 12.59% as investors shifted toward green energy over fossil fuels. Adani Total Gas also gained 7%. Conversely, the auto sector saw a 3% smashdown, with stocks like Exide, Tube, Samvardhana, Uno Minda, and Bharat Forge dropping. FMCG, real estate, and private banks were also down about 1.5%. Winners included Nifty Energy, up 2%, and Central PSEs, up 1.5% to 1.7%.
Movers Of The Day
NTPC was a major mover, rising 12.59% as investors shifted toward green energy over fossil fuels. Adani Total Gas also gained 7%.
Sectoral Overview
Conversely, the auto sector saw a 3% smashdown, with stocks like Exide, Samvardhana, Uno Minda, and Bharat Forge dropping. FMCG, real estate, and private banks were also down about 1.5%. Winners included Nifty Energy, up 2%, and Central PSEs, up 1.5% to 1.7%.
Sector of the Day
Nifty Auto Index
U.S. Market
In the US, the previous session saw gains for Oracle, Chevron, Intel, Conoco, and Exxon, despite the Dow Jones, Russell, and S&P 500 closing lower. The NASDAQ 100 showed a mixed bag with no major losses.
Tweet Of The Day
Regarding oil, Thursday morning saw a big jump to 102 from a previous close of 94, though gains were reduced by midday. This volatility suggests that while the crisis isn’t over, sellers are pushing back on every rise, which could be a positive sign for the markets.
