Where is the market headed?
Today witnessed a sell-off out of nowhere, an event that nobody was expecting. The market was completely down from the morning until the very end of the session. There appears to be a few potential drivers for this movement; it seems there were either some large Foreign Institutional Investor (FII) sales today, or news about oil prices going up is unnerving investors.
Oil has moved from 67 to 71 on fears of a U.S.-Iran attack. The scale of the market move was surprising to everyone. After starting to look slightly better and attempting to consolidate near the 26,000 level, the market has been sold off again. Consequently, there will be a longer wait to see the markets truly trend upward.
A recent update regarding MCX highlights that precious metals margins have come off as volatility in that sector decreased. The additional margins that had been applied for gold and silver futures have also been removed.
This change typically invites bigger positions and brings more speculators back to the market, which increases turnover. Correspondingly, the MCX stock exchange price is going up. On the Nifty chart, however, the picture is different as the index was completely smashed down.
Market Overview
The downward pressure was felt across all segments today. The gains achieved over the previous three days have been entirely wiped out, with the Nifty closing 1.4% lower. This shift significantly alters the short and mid-term trajectory once again.
Nifty Next 50
The Nifty Junior was smashed down 1.8%, mid-caps fell 1.5%, and small caps dropped 1.19%.
Nifty Mid and Small Cap
Bank Nifty
Even the Bank Nifty succumbed, falling 1.32%, although its underlying trends remain positive. This move felt like a bolt out of the blue for equities.
GOLD
Meanwhile, gold is inching up, reaching a price of 15,518 rupees per gram, and silver also moved up 2.47% during this session.
SILVER
Advance Decline Ratio
The advance-decline ratio showed a steady rise in declining stocks throughout the day, ending with 60 advances to 440 declines, representing complete control by the bears.
Heat Maps
Besides ONGC, which rose alongside oil prices, almost nothing was spared. IT stocks fell less than others, which faced a much ruder shock of selling. The Nifty Next 50 heat map was also completely red, leaving no place to hide.
Mover Of The Day
In the “Mover of the Day” segment, Newgen Software rose 20% amidst Middle East orders and AI-driven market momentum, making full use of the current AI buzz.
Sectoral Overview
Conversely, sectoral trends were all down, ranging from a half percent to two and a half percent. Real estate was hit hard, falling 2.5%, partly due to renewed fears regarding whether interest rates will actually be cut in the U.S. as yields start to rise. While it is difficult to pinpoint a single reason for the sell-off, large-scale selling was evident. Autos, consumption, the capital market, and tourism were all down nearly 2% or more. Defense, FMCG, manufacturing, PSEs, and private banks fell between 1.5% and 2%, while other sectors dropped between 1% and 1.5%. Only central PSCs and pharma saw damage of less than 1%. Real estate stocks like Lodha, Developers, Godrej, DLF, Oberoi, and Prestige fell like ninepins.
Sector of the Day
Nifty Realty Index
U.S. Market
In contrast to the domestic market, the previous U.S. session saw an upswing. The NASDAQ, Russell, S&P 500, and Dow Jones all rose between 0.2% and 0.8%. Stocks like General Motors, Morgan Stanley, Intuit, Exxon, and Booking Holdings gained between 3% and 3.5%. While some of these could be part of the Weekend Investing U.S. stock strategy, these are not recommendations. The U.S. heat map looked positive with ASML, MU, Microsoft, Meta, and Amazon in the green alongside Nvidia, while Walmart, Costco, AMD, and Intel remained in the red.
Tweet Of The Day
Reflecting on long-term stock behavior, the PayPal chart serves as a deep lesson. PayPal is down 88% from its 2021 high of over 300 dollars, now trading at 40 dollars. Even though the company is doing fine and its net income is growing, shareholders have lost 88% of their wealth from the top. This demonstrates that stock prices can deviate significantly from fundamental expectations. Investors must learn not to buy or sell stocks blindly based solely on growth numbers, as it is impossible to know what kind of growth is already discounted into the price. Without including price as part of the decision-making equation, investors will continue to face such tricky situations.
