Where is the market headed?
This marks the start of a new week, although it is a shorter one as Tuesday is a trading holiday. The weekend could have been very nice if a negotiation had been reached, but that was not the case. However, hope is still not out. It appears to be a two-week ceasefire, and perhaps the first round of negotiation never goes through.
The market is also recognizing this in a way, as it did not fall on its face; instead, several sectors actually went into the green. Overall, the sentiment seems to be slightly less fearful now. While that is the current read on the situation, it is important to look at the charts for clarity.
Market Overview
In the last seven sessions, the market, especially in mid and small caps, has shown resilience. Every day it opens but closes higher on the Nifty. Out of the last seven sessions, six have closed higher. In an environment of extreme fear and anxiety, this suggests a different story. It indicates that the market is getting resigned to the idea that it has reached a level below which it is not easily going to go.
This is a virtue of strength. If the market were truly weak, it could have fallen gap down today and stayed flat to fill the gap, but it did not. In fact, mid and small caps did not even reach the previous three-day low. From that perspective, some minor strength is definitely present.
On the absolute numbers, the market lost 0.86%, but that is not alarming at all.
Nifty Next 50
Nifty Junior lost 0.77%, and its midterm trend is becoming positive.
Nifty Mid and Small Cap
Mid caps lost only 0.58%. There is significant hope that the situation will get resolved, which is what the market is currently pricing in. If it does not get resolved over the next two weeks, a fall will certainly occur. Small caps were down 0.41%, showing a wide range on the candle today and a good recovery, with short and midterm trends remaining positive.
Bank Nifty
Bank Nifty was also down only half a percent at 0.55%, staying in the same range as previous sessions.
GOLD
Gold is down marginally by 0.31% and has recovered reasonably well.
Crude Oil
Oil, of course, has gapped up at 8.7%. Now, not only is Iran blocking the Strait of Hormuz, but the US also wants to block it, though the specific details are already well-known.
Advance Decline Ratio
Regarding advanced decline trends, the declines were sharp in the first half of the session before plateauing out, with 148 advances to 351 declines. This suggests the market may be reaching a plateauing position.
Heat Maps
HDFC Bank, Reliance, Bajaj Finance, TCS, Maruti, Eicher, and ITC were some of the big names driving the markets down.
In the Nifty Next 50 heat map, the auto sector bore the brunt today, with Chola Finance, Union Bank, Motherson, CG Power, and Bosch all down. The Adani Group and the energy group in general were doing well, as were solar stocks. United Spirits, Pidlilite, and BPCL were also among the decliners.
Movers Of The Day
The mover of the day is Zydus Wellness, which is targeting a $500 million face wash market. The stock has done very well throughout the entire month of March while the rest of the market was bleeding, finishing up 5.7%. Thermax is also performing very well, rallying 6% again after a three-day rally and approaching a key resistance level.
Sectoral Overview
Looking at sectoral trends, only defense, central PSEs, and energy withstood the market fall. Autos were smashed down at 2%, while MNCs, oil and gas, FMCG, and India consumption were all down. The capital market, which provides a good indication of market direction, was flat. Over the last month, capital markets have been the leading sector at 11.4%, followed by metals at 9% and autos at 7.8% despite today’s fall. Pharma has been down 3.2% along with oil and gas.
Sector of the Day
Nifty Auto Index
While auto stocks took a beating today, the index still does not look too bad, having only lost one day of gains from Friday.
U.S. Market
In the previous session on the US markets, ServiceNow, Accenture, Salesforce, Costco, and Nike were thrashed between 7.5% and 3%. The Dow Jones was down 0.5%. Surprisingly, despite being a key player in the current conflict, US markets are not really going down and remain a stone’s throw from all-time highs.
The NASDAQ 100 also saw great gains in semiconductor stocks, with AMD, ASML, AVGO, Nvidia, and Amazon doing well while others were flattish.
Tweet Of The Day
The chart for the micro cap 250 index around 11 o’clock showed that despite a huge gap down, these stocks were the first to recover and maintain their position. This is a clear signal that micro caps and the lower part of the market are not willing to go down rapidly yet. In contrast, large caps are the first to succumb to negative overnight news, likely due to institutional selling. This represents a change where mid, small, and micro caps are leading while large caps are lagging.
