Where is the market headed?
Markets remained dull once again. After two days of showing signs of recovery, the momentum faded, reversing earlier hopes of a bounce.
Market Overview
Nifty slipped by 0.4%
Nifty Next 50
Nifty Junior closed down 0.23% today. While it has outperformed Nifty in recent sessions, today marked a pause in that trend with a minor decline.
Nifty Mid and Small Cap
Mid caps remained absolutely flat, closing just 0.05% higher, while small caps were also flat at 0.27%. However, small caps continue gradually inching up, making newer recent highs compared to the large-cap space.
Bank Nifty
Nifty Bank closed down 0.59%, marking a weak session for the banking space. The index has returned to the consolidation zone it has maintained over the past 15 days, showing limited directional movement.
GOLD
Gold remained sluggish, slipping 0.4% to ₹9,760 per gram. Momentum stayed muted, reflecting broader market quietness.
Advance Decline Ratio
The advance-decline ratio was almost evenly balanced at 252 advances against 248 declines, indicating a largely neutral market breadth.
Heat Maps
Red dominated the screen, with several major stocks losing ground. Infosys, TCS, HCL Tech, Wipro, Tech Mahindra, Reliance, L&T, ICICI Bank, Axis Bank, SBI Life, ICICI Prudential, IndusInd Bank, State Bank of India, HDFC Bank, and Eicher Motors all declined. A few green spots were visible in Tata Motors, Tata Consumer, and Tata Steel, though gains were limited.
In the Nifty Next 50 space, there was relatively more green with Jindal Steel, ABB, CG Power, Siemens, VBL, and Adani Green showing gains. Indigo, HAL, IOC, Dmart, and LTIM all saw declines. PSU banks saw some profit booking after their recent run, while ICICI General Insurance and Vedanta also closed lower.
Sectoral Overview
In the sectoral mix, Real Estate continued showing relative strength, rising 1.24% today. Though still down over the past month, Real Estate has gained 18% in three months and 7% over six months, despite a weak year overall. In the past week, the sector has been moving up steadily.
The worst performer was Nifty IT, down 1.39%, pulling back to levels seen in early May. Defense stocks also extended losses, falling 0.9%, and are down 6% over the past month. PSU Banks corrected after yesterday’s gains, along with the Services sector, Nifty Bank, and Private Banks.
Metals stood out with a 0.67% gain, while other sectors moved within a narrow ±0.5% range.
Sector of the Day
Nifty IT Index
The IT index is clearly losing momentum. Stocks like Tech Mahindra, LTI Mindtree, Persistent, Infosys, and HCL Tech were all down, dragging the IT index lower.
Nifty Realty Index
Real estate is showing signs of a comeback, rising from 960 to 1000, a 4% gain in the last four sessions despite a sluggish market. Stocks like Prestige Estates, Sobha, Godrej Properties, Brigade, and Phoenix Mills are doing well. Larger names like Oberoi and DLF have not yet moved sharply, leaving potential for them to lead once the market approaches all-time highs.
Story of the Day: Biggest Enemy of Your Portfolio
In the previous part of this series, three case studies were discussed. Viewers are encouraged to watch that episode to reset the context of what the illusion of control means. Illusion of control is a cognitive bias where individuals believe they can influence outcomes governed by chance or complex forces. While many things happen due to chance or external factors, people often feel their actions impact the result. Real-life examples include repeatedly tapping a phone screen while waiting for an app to load, standing in the aisle after a flight lands believing it speeds up deboarding, negotiating hard for a minor amount after making an expensive purchase, and honking at red lights. These actions provide a false sense of control while making no real difference.
In stock markets, this bias manifests through behaviours such as averaging down in a falling stock. The action involves buying more as the stock price falls, hoping to lower the average buy price and recover losses. However, the reality is that momentum may signal weakness, and the stock might continue falling or stay down for years.
For example, buying at ₹175, averaging aggressively as it falls to ₹50, but then watching it drop further to ₹7 and stay low for nearly a decade (see the image above). This results in wasted opportunity cost and sleepless nights. Momentum mindset suggests exiting when momentum turns against you and avoiding averaging down. Even if booking losses feels difficult, it is better than adding more capital to a poor investment.
Overriding exit signals is another critical error. Having a strategy that signals exit should be respected. Ignoring it with hope that the stock will recover creates losses. Discipline is essential; SEBI states 91% of people don’t make money, while the disciplined 9% do.
For instance, buying PAYTM on listing day, setting a rule to exit at a 50% loss, but ignoring that rule due to belief in the stock’s future potential, leads to four years of waiting without gains and lost opportunity cost.(see the image above) Always exit when the system triggers an exit or trend weakens, not when hope fades.
Waiting for the perfect entry is another trap. Investors may wait for a specific correction, like 30%, before investing. But markets might rally 100% before such a correction.
For example, buying a stock at ₹500, waiting for a 30% correction that never comes, and watching it climb to ₹2500, only correcting later (see the image above). By then, the missed opportunity is significant. Momentum mindset suggests entering when the trend begins, rather than waiting for the perfect moment.
Constantly switching between strategies is the final case. Newer investors often move from value to growth to momentum strategies, chasing performance. This illusion of intelligent adaptation usually results in losses, as investors switch after one style underperforms and another has already rallied. Sticking to one robust system and playing long term is essential. Early in the journey, exploring different styles is acceptable, but it is crucial to quickly settle on an approach that fits one’s psychology and stay disciplined with it.
The key takeaways are: avoid averaging down, respect exit signals, don’t wait endlessly for perfect entries, and stop switching strategies too often. Discipline and sticking to defined rules are what separate successful investors from the rest.
Another video on the silent killer of your portfolio is recommended for those interested in market psychology. Feel free to share in the comments if you have experienced these struggles in your investing journey.
