Where is the market headed?
The big news is the clean sweep that the NDA achieved in the Bihar elections, an outcome that I think surprised most people, perhaps even the party itself.
The lesson we can take away from this is that what we expect may not actually happen. This is proven repeatedly, whether it’s in markets or, in this case, elections: the masses and the markets have a mind of their own that all analysis often fails to capture. Therefore, when thinking about stocks, sectors, or the market, it’s essential to remember the “Bhaav Bhagwan Che” (Price is God) principle—the BBC principle—which proves that all predictions and analyses can fall flat; the real thing is where the trend, or Bhaav, is actually moving.
The markets were volatile today. We saw a “sell on news” event this morning, where the markets tried to drop below the previous two-day low. However, there was a strong recovery towards the end of the day, indicating that the markets are in fine shape from that perspective.
Market Overview
Looking at the Nifty chart, it opened low and remained weak for a significant part of the day but importantly, it did not close the gap created earlier. Ideally, closing that gap would have happened if the weakness was more severe. Instead, the Nifty shot back up to close near the previous two-day high. Although we didn’t gain much overall, with the Nifty up a marginal 0.12%, it shows the market’s underlying health.
Nifty Next 50
The Nifty Junior was absolutely flat, down 0.09%, but its wide candle shows it was quite volatile during the day compared to the previous two days.
Nifty Mid and Small Cap
Midcaps were also absolutely flat at 0.04%, forming a Doji candle. Small caps saw a marginal gain of 0.18%.
Bank Nifty
The Nifty Bank, however, moved up nicely and closed at what is perhaps an all-time high close, up 0.23%, which is a fantastic outcome for any index.
GOLD
In the commodities space, Gold was very flat today, down a marginal 0.08%.
SILVER
Silver, on the other hand, continues its rally, up 1.14%, and is very near its previous highs. Silver appears to be taking the lead in this movement.
Advance Decline Ratio
The advance-decline trends show that the green line (advances) first declined, then rose, then declined again throughout the day, and finally rose back up towards the end. By market close, the numbers were pretty much even, with 237 stocks advancing and 267 declining.
Heat Maps
The Nifty Heat Map shows a mixed bag. TCS was absolutely flat. Gaining stocks included State Bank of India, Bajaj Finance, Axis Bank, Jio Financial, Coal India, Adani Enterprises, Sun Pharma, and Hindustan Unilever. Stocks that were losing ground included some steel stocks like Tata Steel and JSW Steel, commodity stocks such as Hindalco and UltraTech Cement, auto stocks like Maruti, Eicher Motors, and Tata Motors, along with Infosys in the IT space, ONGC, and ICICI Bank.
Overall, it was a fairly even split between gainers and losers. Similarly, in the Nifty Next 50 space, stocks like Hyundai, Pidilite, TVS Motors, Naukri, HAL, Divi’s Lab, BPCL, and Hindustan Zinc were losing, while Mazdock, Varun Beverages, ABB, Adani Ports, Canara Bank, Bajaj Holding, Bank of Baroda, and PNB were gaining. PSU banks, in particular, looked like the flavor of the day.
Mover Of The Day
The Mover of the Day was KRBL, whose shares jumped 13.26% after reporting a 68% surge in quarterly profit, along with margin expansions and higher revenue. The market was clearly not expecting such a positive outcome from this stock.
Sectoral Overview
In sectoral trends, Defense was moving up again, posting a 1.36% gain on its index. PSU Banks also performed well, up 1.17%, and Central PSUs were up 0.9%. Over the last month, PSU banks have actually been the best performers, up over 10%. This suggests a potential market expectation of some large-scale mergers or reorganization of PSU banks perhaps being announced in the upcoming budget.
On the losing side, the Nifty IT index was down 0.9% due to the drop in US IT stocks. Metals also lost 0.9% of ground, and Autos were down about half a percent. These were the sectors with the more significant movements.
Sector of the Day
Nifty India Defence Index
In the defense space, the chart is looking good, showing a sort of double bottom, an upward move, a two-day rest, and then moving up again. Data Patterns, Paras Defense, Dynamatic, HAL, and Bharat Forge were the stocks moving up in this sector.
U.S. Market
Looking at the US markets in the previous session, it was a down day: the S&P 500 dropped 1.5%, the Dow Jones was down 1.65%, and the NASDAQ was down 2.25%, which is a big deal given the massive market cap size of the US market—a 2% drop translates to a huge loss in value. The Russell 2000 was also down almost 2.75%.
Several big counters saw significant drops, including Walt Disney down 8%, Tesla down 6%, Palantir 6%, Intel 5%, and Broadcom 4%. The dramatic crash in Walt Disney is particularly notable, where shareholders were ambushed as the stock went from 110 to 117 in four sessions and then crashed to 104. The disclaimer here is that some of these stocks may be part of the Weekend Investing U.S. stock strategy and are certainly not recommendations.
Tweet Of The Day
A related tweet highlights the scale of the US market: last night, the US stock market lost $1 trillion in value in a single day, which is equivalent to nearly 20% of India’s entire market cap. This emphasizes the sheer size and importance of the US market, the “mother market,” which is respected for that reason. Even if India, a $5 trillion economy, is growing at 7%, the quantum of value added is less than the value added by a $25-30 trillion US economy growing at 3%, which can add 20% of India’s market cap in just one year. The scales are vastly different.
Another tweet discusses Bitcoin, which is currently crashing hard, dropping from $103,000 yesterday to nearly $96,000 or $97,000 today, causing worry among Bitcoin “hodlers” (long-term holders), despite institutional buying. The core problem appears to be MicroStrategy, led by Michael Saylor, a main proponent of the Bitcoin brigade, who has become an elephant in the room. His company holds 641,692 Bitcoin, bought at an average price of around $75,000 or $76,000, though he has bought at higher prices as well, taking on a lot of company debt to buy Bitcoin.
The market knows this entity is leveraged to the gills and will always try to push the price down to force liquidation. This phenomenon has happened before, where a market manager openly declared holding large percentages of small-cap stocks, leading to those stocks being brought down because the market knew the manager would be forced to liquidate if liquidity was withdrawn.
