Where is the market headed?
The market mood is softening once again, with no let-up in the price of oil. Brent crude has reached 104 dollars, and with Indian ships now being fired at, the safety of oil supply to India is in question. Oil-related stocks, particularly autos, which depend on lower oil prices, have taken a beating. While there was an expectation that this week would bring clarity regarding the market’s direction, confusion continues to linger.
An interesting observation since the start of the war on the 1st of March is that the dynamics between mid-cap and small-cap stocks have completely changed compared to large-cap names. While large-cap stocks, represented by the blue line, are down about 4%, mid and small-cap stocks are up by about 4%. This is a telling situation suggesting that the mid and small-cap segments have had enough and will likely not drop the way they previously were.
The lower end of the market has been bought into by stronger hands, causing that segment to rise, while large-cap stocks are still being sold off by bigger players, resulting in a sluggish comeback.
Market Overview
Looking at the charts, there is a slump today of 0.84%. While the trends are negative, they are not yet alarming. Alarming would be a drop to fill the gap that exists between 23,223 and almost 23,600, as that would bring fear back into the market. The disappointment today is that the market did not break above the pivot to gain more confidence. The last five or six days of gains have been nullified, and the Nifty is back to where it was six days ago.
Nifty Next 50
Nifty Junior also saw its last two days of gains lost, finishing at minus 1.3%.
Nifty Mid and Small Cap
Mid-caps were more shallow with a 0.41% loss, while small-caps saw only a 0.55% loss, indicating that the trend in the mid and small-cap space remains reasonably strong.
Bank Nifty
Bank Nifty saw significant damage at 1.43%. Union Bank’s results were quite disastrous, leading to speculation about whether all PSU banks will report similarly.
GOLD
Gold is also softening, down 0.52%, and is still unable to rise.
Crude Oil
Crude oil is up 2.3% to nearly 104, and on a monthly basis, it is heading toward a new all-time high close, as is the USD INR, which is trading at about 94.08.
Advance Decline Ratio
Advanced decline trends were in favor of declines, with 338 declines to 161.
Heat Maps
It is a very lethargic market where many big names lost ground today, joined by autos and private banks. Only pharma was running up, with stocks like Dr. Reddy’s, Cipla, and many mid-cap pharma stocks performing well, while FMCG took a break.
The Nifty Next 50 heat map also showed pharma and some solar space doing well. Motherson lost ground, and other stocks like Union Bank at minus 7%, DLF, Canara Bank, Bank of Baroda, PNB, and VBL also lost ground as confidence shakes once again.
Movers Of The Day
In the mover of the day segment, Oracle Financial Services reported quarter four profits with good margin expansion and is up 8%. It has gone up almost from 6,200 to 8,800 in a very short span of time. Dr. Reddy’s and Piramal Pharma are also up, demonstrating that whenever the market is in a defensive mode, pharma stocks take over.
Sectoral Overview
Regarding sectoral trends, pharma remains the top gainer of the day at 2.36%, followed by Nifty Media at 0.9%. There is nothing beyond that, while sectors losing more than 1% include consumption services, IT, banking, real estate, PSU banking, Nifty auto, and others. The last one month remains positive for all sectors, but pharma is the laggard among all sectors.
Sector of the Day
Nifty Pharma Index
U.S. Market
In the previous session, the US markets saw indices rise, with the S&P 500 up 1%, the Dow Jones up 0.7%, and the NASDAQ up 1.7%. Intuitive Surgical, Philip Morris, AMD, Boeing, and Broadcom all gained 5 to 7%. Some of these stocks could be part of the weekend investing US stock strategy, though these are not recommendations.
The NASDAQ 100 heat map looked quite good in the semiconductor and chip space, with AVGO, MU, and AMD doing well. Apple recovered 2%, and Nvidia, Google, Microsoft, Amazon, and Palantir all did quite well for the US markets.
Tweet Of The Day
A case study regarding a stock that listed in 2008 shows that from 2008 until about 2023, for almost 15 years or 180 months, there was hardly any money made by investors. Then, in the next 36 months, it went up almost 40x. This is a classical bamboo stick story where the stock grows after years of staying dormant.
The learning is that if a stock is not moving, there is no need to stay invested. One should invest when it starts its journey. Most people get out at 52-week highs, but that is the first indication that a stock can become a multi-bagger. Conventional thought is to sell at 52-week highs or all-time highs, but successful thought is to buy at that point because the overhead resistance is gone. Most stocks do not move for long periods and then make their move in a very short time. Investors should capture part of that move rather than wasting the opportunity cost of capital sitting in a stock for years.
