It was another day when the market inched up—not in a very big way, but still gradually recovering from the previous week’s losses. Today, we’ll discuss whether we have reached the market peak or if we are nearing it, based on a lot of promoter sales, venture capital sales, and new IPOs coming through the market. Please make sure to subscribe to the channel.
Market Overview
Now, where are the markets headed? The market is gradually moving back up to a new high. I have no doubts that we will probably go and retest 25,000 very, very soon. So, no complaints there; the markets are gradually moving up.
Nifty Next 50
Nifty Junior is also up 0.28%, while Nifty was up 0.29%, recovering from the losses of the previous weeks.
Nifty Mid and Small Cap
Mid caps did quite well, rising by 0.4%, now only a stone’s throw from the previous high, indicating a recovery from the base. Small caps have actually done the best, gaining 1.1%, very near previous highs, with a fast recovery in the last four sessions.
Nifty Bank Overview
So, good developments in the market, but the only dragging factor is Bank Nifty, which was down 0.33% today. It did recover from a 0.9% drop in the middle of the day due to worries about the cost of deposits going up and the spread that banks enjoy between the cost of deposits and lending. This seems to be causing some stress in the banking sector.
Momentum Trends
In terms of momentum trends on 20-, 50-, 100-, and 200-day moving averages, things are moving up today. The 20-day moving average has slowed a bit in terms of the number of stocks trading above it, but the 50-, 100-, and 200-day moving averages are still gaining ground, which is a good sign. The advance-decline ratio has also been doing quite well for the fourth consecutive session, supporting the upward movement.
Nifty Heatmap
Looking at today’s heat map, there were some greens in stocks like Asian Paints and Titan, particularly in consumption and FMCG stocks, which did well. However, banking was slightly in the red. In Nifty Next 50, we saw consumer non-durable stocks like Varun Beverages doing well, along with some manufacturing stocks and LIC. On the other hand, there was some softness in stocks like Zomato, DLF, PFC, and REC.
Sectoral Overview
Sectoral trends indicate that FMCG, pharma, consumption stocks, and metals were the ones really driving the market today. Over the last week, all sectors have been in the green, with no sector losing ground. However, real estate did lose 1.3% today, but overall, things are looking quite alright for all sectors moving forward. Pharma, in particular, has been doing extremely well, with pharma stocks running up 10.5% in the last month—the best performance among all sectors. Several pharma stocks are entering various strategies.
Sectors of the Day
Nifty FMCG Index
FMCG was the sector of the day, hitting new all-time highs and coming out of the recent downtrend.
Stocks of the Day
Alok Industries Ltd
In terms of the stock spotlight, Alok Industries moved up nearly 11% today. If you recall, the stock had a huge run-up in January 2024. After a long period of correction and consolidation, it seems a new leg might be starting now. Looking at the long-term chart of Alok Industries, the stock hasn’t moved much in the last two to three years, but it has recovered from recent lows. This could be a good setup with a low-risk opportunity to go long.
Story of the Day
Now, have we reached the market peak? Why do we ask this? Because a lot of promoters have been selling. About ₹1 lakh crore of selling has already happened in 2024, which for some, signals a stock market peak. About 250 companies have sold stakes worth ₹97,000 crore through bulk and block deals. Some of these companies include Indus Tower, Indigo, TCS, Mphasis, Vedanta, and others.
Promoters typically sell stock when they feel the market has overrun its valuation, or they need the money for business expansion, compliance, debt reduction, personal reasons, or strategic realignment. Additionally, some private equity and venture capital funds may be exiting because their fund has reached the end of its life, or they want to capitalize on bullish market conditions for partial or full exits.
Despite these exits, the market has absorbed them well. There has been ₹3.9 lakh crore of domestic institutional buying this year, and liquidity remains very strong. The IPO pipeline is also robust, which usually happens in the second half of a bull market. In the first half, you won’t see as many IPOs or rights issues, but in the second half, more paper comes to the market because smart players—promoters, venture capitalists, private equity investors—see this as an easy time to sell. Buyers, flush with cash from previous gains, may be more inclined to buy, making it an easier sell.
However, it’s important to note that the Nifty has only risen by 30% in the last two years, which is not a huge increase. While small and mid-cap segments have seen significant gains, the larger caps haven’t experienced the same bull market phenomena. This suggests that there might still be more room to run, and even the smartest minds cannot predict where the market tops will be. Tops happen when no one is expecting a downside, and we’re probably not there yet.
In the coming times, we may see some potential volatility due to the US presidential election and interest rate cuts. However, India remains a fantastic market and one of the fastest-growing economies. The only concern is the outflow of FII money, which is currently the only significant worry. Domestic money is flowing in, but foreign money is not. At some point, this might switch, with foreign fund flow supporting the market.
