How are the Markets Looking ?
The market is showing resilience as it continues to perform strongly despite recent events. The broader market is making new highs, while the Nifty is relatively subdued. However, mid and small-cap stocks, particularly railway stocks, are experiencing significant growth.
The Nifty seems to have found good support at the level around 21,500, which is great news for investors. TCS and Infosys have performed well, and even ITC has shown gains.
Nifty Heatmap
The Nifty heat map indicates that certain sectors, such as the steel sector, have witnessed a bounce. Energy stocks like Bharti and companies like Titan, Mahindra, and NTPC have also seen positive movements.
However, HDFC bank has been struggling and continues to decline for the third consecutive day. To establish a bottom, it is crucial for all investors who wish to exit the market to do so. Once this process is complete, the market can then experience a sharp bottom with a rapid rebound. This pattern is often observed during bottom formations.
Sectoral Overview
Looking at the sectoral overview, we can see that Public sector enterprise stocks have made a strong comeback, with a 60% increase over the past twelve months, +2.9% for the day. It is similar to the real estate returns tat have gone up 62% in the past twelve months. Infrastructure stocks, Commodities, Consumption stocks, Metals, FMCG have all done very well today.
Mid-Small & Small Cap Performance
Small caps as mentioned yesterday have seen a huge support at 14,000 ; came back up and showed a very strong spin bar formation and now is showing an upward trend. The Spin Bar is a very strong formation. The only weakness can now happen below 14,000.
Mid caps also had a similar set up, they closed at an all time high after yesterdays move
Nifty Bank Overview
Highlights
Infrastructure stocks and public sector enterprise stocks continue to perform well, with both indexes reaching new highs.
Highlights – Re-rating of stocks
Some stocks have witnessed gravity-defying moves in recent times. For instance, IRFC and RVNL have experienced substantial increases in their stock prices within a short period. IRFC has gone from Rs. 100 to Rs. 160 in about 10 days. Similarly, RVNL went from Rs. 180 to Rs. 292 in about 10 days as well. Although these moves seem overbought and potentially unsustainable, this type of re-rating process is not uncommon. Stocks tend to move from one level of comfort to another level of equilibrium, resulting in sharp upward or downward movements.
Equilibrium levels in the market are subject to constant shifts. For example, HDFC bank was previously comfortable at around 1700 but has now shifted to a new equilibrium around 1500. There is a shift for which level the market wants the new equilibrium to be at.
Railway stocks currently are going under a massive re-rating. These stocks along with PSE stocks and PSU banks have been extremely underowned by most mutual funds and institutions. That catch up is also happening. Whatever stock is going up, one shouldn’t pass it away, thinking that if it has gone up so it will come back; it might not. However, some stocks that are completely froth and may be of fraudulent nature will come back; however, if there is any material reason for this shift, maybe it will go up and be comfortable at its new equilibrium level.
When investing in the market, it is essential to adopt multiple strategies that encompass short, small, mid, and large-cap stocks. This diversification can help mitigate risk and ensure consistent returns.
Despite the potential for external forces to impact the market, it is important not to shy away from investing. While it is possible for stocks or indices to experience periods of consolidation after a significant run-up, the market’s long-term potential should not be overlooked.
For more detailed analysis on how to look PE ratios and if they are important, check out the detailed video linked below !
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