Where is the market headed?

The week began on a rough note, with large caps remaining weak throughout the day, while the broader market stayed relatively firm. Over the weekend, fresh tariff tensions involving the Eurozone and Canada added to global uncertainty, leading to considerable confusion.

This has pushed investors towards alternate assets. Gold, silver, and Bitcoin are all moving higher, indicating a shift in sentiment. At the same time, the dollar index is strengthening rather than weakening, creating a rather unusual market setup. How the market has navigated this environment will become clearer when reviewing the charts.

Market Overview

Nifty made an exact low of 25,001, showing some support at the 25,000 level. It closed at 25,080, slipping back into the congestion zone with a loss of 0.27% for the day.

Nifty Next 50

Nifty Jr. came down initially but recovered strongly in the second half of the day, closing 0.47% higher.

Nifty Mid and Small Cap

Mid caps were also up 0.64%, making both mid and small caps the stronger segments today.

Small caps gained 0.92%, nearing the top of their recent range. This indicates clear optimism in the small-cap space regarding the upcoming result season, highlighting a noticeable divergence between large caps and small caps.

Bank Nifty

Bank Nifty closed almost flat, up just 0.02%, which is reasonable given that it is already trading very close to its all-time high.

GOLD

Gold is up 0.73% today, now at ₹9878 per gram. In dollar terms, it has crossed $3,375 and is just about 2% away from its all-time high.

Advance Decline Ratio

The advance-decline ratio was reasonably balanced today, with 284 advances against 215 declines.

Heat Maps

The advances saw IT stocks getting hammered the most, with Infosys, TCS, HCL Tech, Wipro, and Tech Mahindra all down. This comes after TCS reported poorer-than-expected numbers. Some bank and NBFCs were also down, along with Reliance, L&T, Asian Paints, Tata Motors, and Eicher Motors.

There was some pickup in Eternal, Sun Pharma, ITC, and Adani Enterprise. ONGC also saw some gains, showing a divergence from the broader Nifty trend.

In contrast, Next 50 space appeared much greener. There were good gains in Torrent Pharma, Varun Beverages, Adani Green, Bosch, Canara Bank, Hyundai, TVS Motors, Swiggy, and a few other stocks.

On the losing side, DMart fell after poor performance, along with LIC, IRFC, PFC, ABB, LTIM, Jindal Steel, and others.

Sectoral Overview

In the sectoral trends, Real Estate was gaining, up 1.39%, signalling a comeback. Real Estate does not seem to be in a slump; it corrects along with the broader market but continues to show an undercurrent of strength.

Media and Capital Market stocks were also up 1.3% each. Capital Markets saw a boost after Jane Street, which had been suspended by the regulator, was allowed to deposit around ₹4,800 crores and could potentially resume trading. While the full order is awaited, this development is being seen as a positive for Capital Market stocks, with names like BSE and other brokerages rising.

Pharma was also up 0.8%, while PSU banks gained 0.73%. On the losing side, Nifty IT was down 1.1% and Defence fell 0.85%. Looking at the monthly change, these two—IT and Defence—along with Real Estate, are the key sectoral laggards.

Sector of the Day

Nifty Realty Index

In the real estate space, Sobha, Godrej Properties, Brigade, Prestige, and Anant Raj are all showing signs of a comeback. While these stocks are not yet near their all-time highs, they are stabilising and holding firm. Over the past four days, even as the market slipped, real estate stocks have not really gone down, unlike the IT space.

Nifty IT Index

TCS results came in recently, and since then, the market has seen several negative days. Today, Wipro, Infosys, TCS, Tech Mahindra and LTI Mindtree were all down.

Story of the Day: How Financial Crisis Created The Whole Bank

In 1693, England faced not just a military crisis but a severe financial one. With constant wars against France draining its coffers, the Crown desperately needed £1.2 million to rebuild its fleet. However, no one was willing to lend to the monarchy. Memories of the ‘Great Stop of the Exchequer’ in 1672 when King Charles II had defaulted on debts to London’s goldsmith bankers left trust in royal credit shattered. As a result, the entire banking system neared collapse, with bankruptcies spreading and financial confidence dying out.

Amidst this turmoil, a group of visionary financiers led by William Paterson proposed a revolutionary idea inspired by Dutch practices. Instead of relying on a handful of wealthy lenders, the people of England would become the king’s banker through a joint-stock company. This led to the creation of the Bank of England in 1694. The Bank of England was formed as a private institution with exclusive rights to issue banknotes and manage the government’s debt, marking the first time a private bank was entrusted with such authority. In just 12 days, £1.2 million was raised from 1,520 subscribers, including the king himself and 150 women investors.

The Bank’s model introduced a crucial financial innovation: It would lend to the government, not just by using its own capital but by creating new money through paper notes backed by government promises. This marked the birth of a confidence-based financial system. Importantly, the Bank could issue notes worth up to three times its actual capital, essentially creating money from thin air—a practice that mirrors modern central banking. If everyone demanded their money back simultaneously, there wouldn’t be enough assets to cover the notes, highlighting the trust-based nature of this system.

This system helped England recover from its financial brink and ultimately fueled its rise as a global empire in the 1700s and 1800s. The Bank of England’s creation marked a pivotal moment in history, giving the government a reliable funding source and solidifying its financial stability. It allowed England to borrow at lower rates, build a formidable navy, and expand its global influence. The concept of leveraging deposits to issue multiple times the value in banknotes became the foundation of modern finance.

For centuries, similar systems operated with some form of backing, like gold. Until 1971, currency issued by the U.S. was backed by gold, maintaining a semblance of sound money. But post-1971, currencies became purely fiat—notes backed by nothing but collective belief. Today, central banks like the U.S. Federal Reserve can issue unlimited currency without any physical backing. The paper currency used every day is simply an IOU that holds value only because society agrees it does.

This is how the modern monetary system evolved: from England’s financial desperation to a system where money is created through trust and confidence rather than tangible assets. The journey from crisis to creating an institution that could issue money on leverage shaped global finance as it is known today.