Where is the market headed?
The trading week commenced with significant volatility as the market experienced initial bloodletting. In the very first hour of Monday, March 16th, the Nifty was down by more than 1%, while mid and small-cap stocks saw a decline of almost 2% or more. However, a reversal subsequently started where the Nifty jumped almost 500 points to end the day in green.
While some parts of the market remained red and it is too early to definitively say a bottom has been formed, some positive cues have started to appear. Specifically, twenty-plus vessels carrying oil and LPG are likely to pass through and arrive in India. Although this activity will essentially have a delayed inflation lag, people are beginning to see raw material costs rise, and once they are up, the down cycle is usually very limited. This pass-through of inflation will hit the street in a few months, meaning troubles are not entirely over, but for today, there was not too much blood on the street.
The war remains ongoing with Dubai airport shut and bombing continuing. There is a press conference scheduled for tonight, India time, where President Trump may announce a ceasefire. This is a gut feel based on the announcement of a PR event this evening, and there is hope that some sanity will prevail.
Market Overview
The Nifty finished up 1.11% today, though it remains unclear if this is a dead cat bounce or a true bottom. It is necessary to wait for at least a two-day high to be made and sustained to see if the market can build toward existing gaps, specifically reaching toward 24,500, before declaring a durable bottom. Currently, market charts are reasonably bad and all momentum indices are pointing downwards.
Nifty Next 50
The Nifty Junior was down 0.35%. A long-tailed candle occurred today, which represents a chance of a reversal; a similar situation happened recently for a day before collapsing, so this could arise again in mid-caps.
Nifty Mid and Small Cap
Mid-caps showed a significant recovery from the bottom to close 0.37% down, and small-caps followed a similar pattern to close 0.36% down.
Bank Nifty
All charts are showing a similar pattern of recovery from the day’s low and closing near the open, while the Bank Nifty and Nifty were the outliers with net positive gains of 1.22% for the day.
GOLD
In the commodities space, gold is slipping with a 1% drop to a rate of 15,654. Reports indicate there are significant discounts in the physical gold market, suggesting some selling is moving through.
SILVER
Silver also fell 4%, and the chart does not look pretty, indicating it could go much lower from here.
Advance Decline Ratio
The advance-decline ratio stood at 183 advances to 316 declines, showing the broader market is still reeling under pressure despite the bounce.
Heat Maps
An overview of the heat map shows most of the market was green, with leaders like HDFC Bank, Bajaj Finance, Mahindra, and UltraTech Cement leading the way. Conversely, some energy and oil companies remained down.
The Nifty Next 50 heat map was less green, though gains were seen in TVS Motors, Adani Power, Shree Cement, and LIC. Oil companies such as IOC, BPCL, and others like Hindustan Zinc, Torrent Pharma, and Hyundai were smashed down.
Movers Of The Day
In the mover of the day segment, ITI jumped almost 20% at one point and closed up 14.38%. On the downside, IDBI Bank is tumbling hard as the strategic sale is slightly scrapped, causing the price to drop quickly from 116 to 76 rupees, a 16% decline.
Sectoral Overview
Looking at sectoral trends, autos came back up 1.6%, while financial services, private banks, FMCG, and consumption services were all up 1% or more. Losers included oil and gas at 1.5%, which may indicate that if oil is falling during this war, the spike in prices may be pausing. Real estate remains very weak, and public sector enterprises, CPSE, Pharma, and Nifty Energy all lost ground between 1% and 1.4%. While it is a mixed bag, the green views on the screen are welcome.
Sector of the Day
Nifty Auto Index
The auto sector had been previously smashed down, so today’s movement from Mahindra, Bajaj, TVS, and Maruti is a small jump from the bottom.
Nifty Realty Index
In real estate, despite the market recovery, stocks like Sobha, Oberoi Realty, DLF, Lodha, and Anantraj all lost ground.
U.S. Market
The previous session in the US markets saw big losses, with Adobe down 7.5%, Broadcom down 4%, and Meta, Salesforce, and Oracle also losing ground. Overall, US indices were down about half a percent. Some of these stocks, including AVGO, Meta, Apple, Nvidia, Microsoft, Amazon, and Tesla, are part of the Weekend Investing global strategy.
Tweet Of The Day
A chart comparison of the Dubai real estate index in blue versus the India real estate index in green shows a surprising trend. In the last three years, the Dubai index remains above India’s index even after the trashing it received in the last two weeks. Often, focus goes to sensational news while the domestic real estate index has slipped very hard over the last year and a half. Analysis shows that no stock in the Indian real estate index is currently above its 200-day moving average. These stocks may have already priced in a slowdown on the ground before it actually happens, which is a good learning lesson.
The market remains extremely dependent on a de-escalation of conflict and the reopening of the Strait of Hormuz for shipping vessels. While the stress may not vanish instantly, such news would likely see it dissipate rapidly.
