Where is the market headed?
The markets currently remain flat with no runaway rallies, yet there is a sense of stability. An improving undercurrent is visible as broad-based gains begin to settle in. While frontline stocks are not moving up significantly, the mid-cap, small-cap, and micro-cap ranges are consolidating and appear to have stopped falling. Despite a brief bounce in recent sessions, some stocks are still bleeding, though metal stocks and PSU banks have started to rally again.
A notable discussion point today stems from a tweet by The Gladiator, quoting popular macroeconomist Luke Grohman. Grohman predicts that gold could reach 25,000 dollars in the next five to ten years.
Beyond predictions, he makes a phenomenal claim: over periods of one, two, five, 10, 20, and 25 years, gold has outperformed the S&P 500 total returns, which includes reinvested dividends. This data should serve as a wake-up call for those who have dismissed gold’s role in a portfolio.
While equity remains a great asset class, there are compelling reasons to allocate to gold now. The global economic regime is shifting away from the last 50 years of free-flowing dollars and consistently reducing interest rates.
Market Overview
The market has been up for the third consecutive day. Three days ago, the Nifty showed a very nice bullish engulfing candle, followed by a promising two-day high close yesterday. Today, the market closed even higher. Although prices haven’t moved extensively since the U.S. deal announcement, the negativity has been absorbed. As long as the market stays above 25313, the current range is secure; fireworks are expected if we break above 26000.
Nifty Next 50
The Nifty Junior is approaching recent highs and displaying a cup and handle formation that could lead to a breakout, closing up 0.67%.
Nifty Mid and Small Cap
Mid-caps rose 0.55% for their third straight day of gains, while small caps rose 0.5% despite trailing previous highs due to their earlier aggressive moves.
Bank Nifty
The Nifty Bank hit another all-time high close, up 0.62%, signaling a market set for a higher rally.
GOLD
Gold remains stable with a 0.9% gain today, priced at 15199 per gram.
SILVER
Silver recovered yesterday’s losses with a 3.44% jump. Despite the Lunar New Year holiday in China—where Western players often attempt to bring prices down to cover paper shorts—the metals market seems stable and ready for an upward move.
Advance Decline Ratio
The advance-decline ratio was flat at 266 advances to 234 declines.
Heat Maps
The Nifty heat map shows widespread green, with the exception of IT and some energy stocks. Reliance performed well at 1.2%, alongside gains in Axis Bank, Bajaj Finance, HDFC Life, ITC, and Mahindra and Mahindra. Conversely, TCS, Infosys, HCL Tech, and Wipro were down.
In the Nifty Next 50, Adani Green, LTIM, Torrent Pharma, and Pidilite saw declines, while CG Power, Vedanta, IOC, BPCL, Divi’s Lab, ICICI GI, and REC posted gains.
Mover Of The Day
In the “Mover of the Day” segment, Godfrey Phillips moved up dramatically by 19.94%, shaking off earlier concerns regarding higher cigarette taxation. The stock formed an inverse head and shoulders pattern and met its target today. ITC also gained on expectations of potential price hikes.
Sectoral Overview
Sectorally, the Nifty IT has suffered enormous damage, falling 16.42% over the last month. In contrast, Central CPSE, Energy, and PSU Banks have gained between 6% and 7% in the same period. While IT crashed further today, it did recover slightly from the bottom, suggesting a floor may be near despite the market’s skepticism toward recent announcements.
Sector of the Day
Nifty IT Index
U.S. Market
In the U.S., where markets were closed Monday, Tuesday’s trade saw the NASDAQ fall as stocks like Mondelez, Oracle, Walmart, and Medtronic dropped 3% to 5%. While the NASDAQ was down, the Dow and S&P 500 were up. Apple saw a resurgence, up 3%, and Nvidia and Avgo also gained, while Google, Microsoft, and Tesla declined.
Tweet Of The Day
The chart of Infosys provides a lesson in recognizing weakness. Following a series of gap downs and a “dead cat bounce,” the stock has continued its downward trajectory, shattering investor confidence. The advantage of a rule-based momentum strategy is that it keeps you away from such stagnation and weakness.
A momentum strategy wouldn’t have even touched a stock like Infosys with a barge pole because it has lacked strength for so long.
Using momentum strategies simplifies life by removing the need to second-guess market moves, ensuring you stay aligned with the strength of the market.
