Hello and welcome to the Weekend Investing Daily Bite of 19th September. The much-anticipated Fed meeting took place, and we saw a half percent cut. However, the markets were not particularly enthused by this development. In today’s DB, we will also discuss how India is moving ahead of China on certain parameters.
Market Overview
Where is the market headed? The market opened with a bang, reaching a high of 25,625 (25,611 to be precise), but closed down at 25,415. It seems all the news about the half-percent cut was already baked in, and now the market wants more to really go up; otherwise, it’s not showing much interest.
Nifty Next 50
The Nifty Next 50 took a dive, dropping to 73,338 before closing at 74,419. Despite some recovery in the second half of the day, it still closed down by 0.7%.
Nifty Mid and Small Cap
Mid caps also took a hit, declining to the support area of 21,161 before recovering to 21,965. Small caps followed a similar trend, coming down towards their support and recovering slightly but still closing 1.1% down. Essentially, the markets had already factored in the half-percent rate cut, and there were no surprises. The speech by the Fed governor did little to excite the markets further.
Nifty Bank Overview
Bank Nifty also retested its previous high but succumbed to it, closing 0.54% higher. Banks, naturally, benefit from the bond book momentum in such situations.
Advanced Declined Ratio Trends
Today’s market trends showed 327 declines compared to 173 advances, with the declines clearly having the upper hand. In the previous session, FIIs continued buying, adding 1,153 crores, while DII buying has almost dried up, with just 152 crores on 18th September.
Nifty Heatmap
Today’s heat map reveals that there wasn’t much green, with NTPC and some FMCG stocks, like Hindustan Unilever and Nestlé, making partial gains. IT stocks were down, similar to yesterday, as were energy and metal stocks. Kotak Bank was an outlier, showing green along with HDFC Bank.
In the Nifty Next 50, finance companies like PFC and REC, which were expected to perform well post-rate cut, did not deliver, leading to a sell-on-news scenario. Other PSUs like HAL, BEL, and IOC also lost ground. On the downside, ABB, Adani Transmission, and YES Bank were big losers, while Pidilite, Dabur, and SBI Life Insurance posted modest gains. ICICI General Insurance also showed some positive movement.
Sectoral Overview
Overall, consumption stocks, private banking, FMCG, real estate, and autos saw mild gains today. Public sector enterprise stocks were smashed down by 1.6%, PSU banks down by 0.7%, metals down by 0.6%, and pharma down by 0.4%. No clear trend has emerged post-Fed cut, and we find ourselves in a bit of a lull, waiting to see where the market goes next now that the trigger has already passed.
Sectors of the Day
Nifty FMCG Index
Among FMCG stocks, United Breweries was the top gainer, rising 4% to 2,130, with other mild gains in stocks like Balrampur Chini, Dabur, Nestlé, HUL, and Tata Consumers. In the stock spotlight today, KPR Mills surged by 8.8%. KPR Mills has seen an impressive rise, climbing from Rs 60 to Rs 934 over the last four years, showing consistent and remarkable growth.
Stocks of the Day
KPR MILL
Over the last four years, KPR Mill has seen a consistent rally, growing from Rs. 60 to Rs. 934.
Story of the Day
Now, on to today’s main topic—India surpassing China. The MSCI market index, which tracks large, mid, and small-cap stocks across 23 markets, now shows India’s weight exceeding China’s. This is significant. The top 10 constituents, primarily U.S. tech giants like Apple, Nvidia, Microsoft, and Amazon, account for 18%. The country weights reveal the U.S. holds 63%, China 5.8%, Japan 3.5%, and India has now reached 2.35%, edging out China at 2.24%.
The MSCI World Index, followed by many global funds, is now allocating more to India than China. If we look at the MSCI India ETF vs. the MSCI China ETF, from February 2012 to February 2021, China was ahead by 149%, compared to MSCI India’s 73%. However, since 2021, the tables have turned, with MSCI China dropping by 54%, while MSCI India is up by 43%. So far this calendar year, India is up 18%, while China has only risen by 1%.
When comparing India to other emerging markets, MSCI India has surged 154%, whereas the MSCI Emerging Market Fund is up by only 26%. In a broader comparison, India is leading again, with the MSCI India ETF up 50% versus the world’s 40.6% and emerging markets’ 17.86%.
These charts clearly show that India has outpaced other markets significantly. Some consolidation or time correction could be expected, with the market possibly moving sideways for a while. Global funds will need to take a more measured approach when allocating between India and other regions.
