The session today was rather dull as investors were cautious ahead of the holiday and the upcoming data releases from the US. There wasn’t much movement, making it difficult to pinpoint specific sectors to discuss.
Market Overview
The Nifty barely moved today, ending at +0.02%. After yesterday’s breakdown of the flag, today’s session was insipid, with consolidation within a narrow range. This might indicate a change in trend.
Nifty Next 50
Nifty Junior also showed minimal movement, closing just 0.05% higher, holding support, but not breaking down below key levels.
Nifty Mid and Small Cap
Mid-caps lost some ground today, dropping by 0.6%. A rough head and shoulders pattern seems to be forming, and if it falls below the 20,200–300 level, we might see more downside risk. Small caps followed a similar trend, also down 0.6% and approaching a crucial support level. If that level is breached, we could see a prolonged consolidation period.
Nifty Bank Overview
The Bank Nifty gradually inched down by 0.21%, sitting on a razor-thin edge. If the recent low from five days ago is broken, algorithms might push the market lower. The hope lies in forming a double bottom, but the current drift is more of a downward trend than a sharp fall.
Nifty Heatmap
In the heat map, most sectors were red, but IT stocks saved the day with gains in TCS, Infosys, HCL Tech, and Wipro. On the other hand, commodities, oil, and gas stocks like Coal India and ONGC saw significant declines, along with some pressure in the metals sector.
Sectoral Overview
Pharma stocks are showing promise despite a bit of profit-taking today. The sector has been one of the top performers over the last three months, along with defensive sectors like FMCG and consumption stocks, which have done well recently.
Sectors of the Day
Nifty IT Index
The IT index has bounced back, covering the gap created last week, and now looks poised to challenge previous highs. The sector’s chart shows a promising pattern, indicating strength in the short term.
Stocks of the Day
EPL Limited
In today’s stock spotlight, EPL Limited surged by nearly 12%, showing that even in a dull market, there are opportunities for rapid gains. The stock has been on an upward trajectory and appears ready to take on previous highs.
Story of the Day PSU Stocks Discussion
There’s been a narrative lately about whether to get out of PSU stocks. Historically, the public sector enterprise index has had only one major rally from 2002 to 2008, where it gained over 16 times. The current rally, though impressive, is about five times from the recent bottom, leaving the question of whether it will continue to climb or not.
The public sector banking index shows a similar pattern, with significant gains in the current rally. However, mutual funds and FIIs have been reducing their holdings in some PSU stocks, but the percentage changes are minimal. The narrative of dumping PSU stocks might not be as clear-cut as it seems.
Despite mutual funds and FIIs turning bearish on some counters, PSU stocks are still reasonably valued compared to Nifty 50, trading at lower multiples. The concern is whether the recent gains in PSU stocks are sustainable or if they’re due for a long period of stagnation.
The article in the Economic Times suggests that the reduction in holdings by mutual funds and FIIs might be due to reallocation rather than a wholesale dumping of PSU stocks. While some may fear the end of the rally, others argue that it could continue, given the historical context.
In conclusion, just because something has gone up doesn’t necessarily mean it’s time to sell. Stocks that are going up should be embraced, and those that are going down should be approached with caution. The psychological tendency to sell winners and hold on to losers is a common mistake, but it’s important to shift that mindset.
