Where is the market headed?
After yesterday’s drubbing, the market was in a better mood today. While small caps didn’t really perform, the rest of the market tried to come back, and there was no panic in the market like yesterday’s market. Some of the sectors that were beaten down brutally yesterday also came back. It seems like there is some lull before the next storm, but we are holding that.
Last evening, what has happened is that private credit giant Blue Owl and several such companies which are private equity are losing ground. They have lost significant ground in the last many weeks also because some of them are heavily exposed towards software companies and some of them are debt funds where the redemption is not being allowed right now.
There are murmurs of some kind of cracks in the system in the US, and that is causing some turbulence in the Indian context. This is despite so many days now having gone by, despite the AI Summit having gone through, and despite top leaders of various companies assuring that IT companies are taking care of this need of AI intelligence in terms of their capabilities having partnered with top companies.
Market Overview
On the Nifty, it was a mild comeback. The good thing about the Nifty so far is that this gap that is there since the day the U.S. deal was announced has not been filled. If the market was really weak, it would have come and filled that gap today itself, but that has not happened.
However, that doesn’t mean that it can’t happen in the future. There are bouts of weakness and bouts of strength coming in, and the market primarily is directionless right now.
Nifty Next 50
Nifty Mid and Small Cap
Mid caps were up 0.48%, and again, here the gap is maintained. Small caps were down 0.18%, acting slower than the other market.
Bank Nifty
Nifty Bank is recovering quite well, up 0.7%.
GOLD
Gold is inching up 0.53% at 15,586, and silver is up 2.3% at 251,992.
SILVER
Advance Decline Ratio
Once the morning stability was there, the advanced declines were completely flat at 250 to 250.
Heat Maps
You can see the IT pack is in the red corner, but the rest is looking reasonably all right. Whether it was energy stocks, capital goods, or FMCG, all looked quite alright.
Nifty Next 50 also had some nice gainers in banks, capital goods, and some auto stocks.
Mover Of The Day
In the mover of the day segment, ABB jumped 5% on record orders and strong Q4 demand. ABB is running up very rapidly; at the beginning of Feb, it was at 4600, and now we are already at 6000 on this stock.
Sectoral Overview
Sector of the Day
Nifty IT Index
Regarding sectoral trends, only Nifty IT was beaten badly, down 0.4% for the month gone by. We are now down 16% on Nifty IT and down 22% over the last one year. This is probably the only sector that has got damaged this year.
U.S. Market
The IT index was down 0.98%, and negative U.S. markets are also reeling. Dow Jones was down 0.5%, S&P 500 down 0.2%, and Nasdaq down 0.4%. Booking Holding, which has been running up very hard, was minus 6%. Accenture, Charter Communication, General Motors, and Mondelez were all down 2% to 4%. Some of these stocks could be part of the Weekend Investing U.S. stock strategy, though these are not recommendations. The small cap part of the market was not bruised at all.
In the heat map, chip makers and big companies were losing ground. Apple was down 1.4%, and while most larger M7 companies were not really impacted yesterday, Costco and Walmart continue to bleed badly. Netflix, Intel, ASML, and Micron were also down, with only AMD gaining ground in that space.
Tweet Of The Day
Finally, a tweet from Neil Borate showed how ETFs on international indices are trading at a huge premium. Motilal Oswal Nasdaq 100 is trading at a 6% premium, Nasdaq 50 at 8%, and Mirai Hang Seng and S&P 500 are at 20%. The reason is that the Indian government doesn’t allow buying stocks beyond a certain point.
People want to buy these listed ETFs regardless of the fact that they are paying 20% higher than what they are worth. While you might sell 20% higher if demand remains, if the government opens the limit tomorrow or if there is a downtrend overseas, that premium will vanish.
