Where is the market headed?
We’ve had a good start to the week, with the Nifty again flirting with the 26,000 mark. The market showed a good all-round performance. The results season is mostly over, and fundamental experts generally view it as having been a good one. There is now an expectation of a US-India tariff resolution, and the market appears to be priming for a breakout above 26,000. It hasn’t happened yet, but the level is being tagged very frequently, and once it breaks through, we should see a lift-off.
Some recent IPOs, like Groww, have performed exceptionally well, trading 60-70% higher than their listing or at least above the IPO price. This success has brought good confidence back to the market, as people have made money following an IPO listing after a long time.
Market Overview
Overall, the market looks reasonably sound. Potential triggers, such as what might be announced in the upcoming budget concerning sectors like PSU banking or defense, or a narrative around the US-India tariff deal, could kick off some stocks in our markets. Essentially, the market is currently waiting for a trigger. Let’s look at some charts to see where a trigger might emerge.
The Nifty is looking very comfortable today, up 0.4% and just crossing 26,000. Breaking this previous peak could lead to an attempt at the all-time high of around 26,300-26,400.
Nifty Next 50
The Nifty Junior was also up half a percent.
Nifty Mid and Small Cap
The broader market is doing well, with Midcaps and Small caps both showing strong gains of 0.68%. This trend of smaller and mid-cap stocks outperforming large-cap stocks is notable.
Bank Nifty
The Nifty Bank surged to a new high with a 0.76% gain for the day, closing at 58,962.
GOLD
In the commodities space, Gold was absolutely flat at 0.06%, while Silver was slightly up at 1.23% after two consecutive sessions of decline.
SILVER
Advance Decline Ratio
The advance-decline ratio was heavily in favor of advances, with 336 stocks advancing against 164 stocks declining, despite a slight dip during the day followed by recovery toward the close.
Heat Maps
The Nifty Heat Map was largely green across financials, IT, autos, and infrastructure stocks. Notable exceptions to the gains included Tata Motors moving down by 4.7%, along with Jio Financial, UltraTech Cement, and Naukri also moving down.
In the Nifty Next 50 space, there was a lot of green. While Bajaj Holdings, Vedanta, Zydus Lifesciences, DMart, and Hindustan Zinc were among the losers, there were good gains in TVS Motors, Pidilite, IOC, BPCL, Bosch, ABB, Siemens, Adani Green, Tata Power, and Canara Bank.
Mover Of The Day
The Mover of the Day was Narayana Hrudayalaya, which saw a rocket move of +14.5% following its Q2 results and the announcement of expansion plans, an outcome the market was clearly not expecting.
Sectoral Overview
In sectoral trends, almost all sectors were in the green, even Nifty Metal was up 0.01%. The star performers, however, were Nifty Banks, with PSU Banks up 1.09% and Private Banks up 0.8%. Autos made a comeback at 0.85%. The Nifty Bank as a whole gained 0.76%, while Consumption stocks and Public Sector Enterprise stocks, along with MNC stocks, were all up more than half a percent.
Sector of the Day
Nifty PSU Bank Index
Within PSU banks, which reached a new high, Indian Overseas Bank, Bank of Maharashtra, Central Bank, Punjab & Sind Bank, and Indian Bank led the index.
U.S. Market
In the previous session of the US Markets, there were some losses in the Dow Jones, the S&P 500 was flat, the NASDAQ was also flat, and the Russell 2000 was slightly up 0.2%, suggesting a tentative trading day. Earlier on Friday, stocks had fallen a lot but recovered back.
On the downside, Netflix was down (due to a stock split, not a 90% drop), while Bristol-Myers was down 4%, PayPal 3%, UnitedHealth, and Pfizer also declined. Some of these stocks may be part of the Weekend Investing U.S. stock strategy, which is stated as a disclaimer.
Tweet Of The Day
One tweet highlighted the volatile price action of an unlisted stock, Metropolitan Stock Exchange, which had surged from ₹2 to approximately ₹12 in the last year but has now fallen back to ₹3. This means 75% of the gains have been lost. This exemplifies how a lot of money is “sloshing around” in the pre-IPO and unlisted market space, leading to a significant number of investors getting stuck. Investors need to be extremely cautious because the sellers in this market often use narratives to push transactions. Furthermore, unlisted stocks have several inherent risks:
- Data on their workings is not openly or widely available.
- They may not be as researched as listed stocks.
- The liquidity can be very low, leading to huge gaps between buyer and seller prices (high impact cost). For instance, if you buy at ₹3, the only available buyer when you go to sell might be at ₹2.
- There’s a trust issue if you’re buying from an unregulated entity.
- The entity itself may not list for years.
The advice is to avoid falling into this trap unless you are very certain about what you are buying or selling.
The other tweet discussed Alphabet (Google’s parent company), which has nearly tripled in the last five years, going from roughly $100 to $300. The point of discussion was the recent investment by Berkshire Hathaway into Google. Warren Buffett and his team have historically maintained that they don’t understand technology and don’t see value in it. Suddenly, after this massive run-up and at new highs, they made a huge investment.
This sudden change in view, especially at the highest price point, is baffling to followers of the traditional value style of investing, as even momentum investors would have gotten in much earlier. This opens up a debate on how their investment philosophy seems to have shifted, and any insights would be welcome.
