Where is the market headed?
The markets faced a turbulent session today, with the Nifty roiled by a significant drop of almost 350 to 400 points at one stage. While there was a slight recovery toward the end, the atmosphere remains very tentative. Market participants are extremely nervous as they look ahead to a State of the Union address by President Trump scheduled for 7:30 AM tomorrow morning.
The uncertainty surrounding potential announcements—whether they involve a declaration regarding an Iran war or new tariff tantrums—is keeping everyone on edge. As a reminder, please ensure you read and fully understand the disclaimer.
The Nifty IT index is currently experiencing a collapse like nobody’s business. This sell-off follows the release of a report and an article yesterday forecasting that the world will be a very different place by 2028. Global markets reacted sharply to this news; US markets, I share, and Indian markets all moved lower.
There seems to be a lack of belief that existing companies can restructure to take this problem head-on. For now, the pain is very real. This may serve as a necessary reality check for Indian companies that had become complacent. AI technology was not developed yesterday; it has been in the works for a decade and a half, yet a “Chalta Hai” attitude may have caused this harm. The hope is that these companies learn from their mistakes, tighten their belts, and refocus on transformation.
Market Overview
Looking at the broader market, the Nifty was down 1.12% but is not “out.” A technical gap still exists that did not get filled today, suggesting there is still some underlying strength rather than a weakness where a single nudge would cause a total fall.
Nifty Next 50
Meanwhile, the Nifty Junior was flat at 0.08%, mid-caps were marginally down by 0.28%, and small-caps fell 0.6%, recovering slightly from their bottoms.
Nifty Mid and Small Cap
Bank Nifty
The Nifty Bank fell 0.35%. No major technical levels were broken today, and the market remains within its established range.
GOLD
In commodities, gold fell 1% today to 16,027 per gram, despite a dramatic rise last evening.
SILVER
Silver is running up at 272,000 per kg, remaining flat for the day.
Advance Decline Ratio
The advance-decline ratio was not too bad, with 194 advances to 306 declines.
Heat Maps
The Nifty heat map showed concentrated heat in the tech and telecom sectors. L&T lost 3.6% of its ground, and private banks are losing rapidly. Despite news that fraud had been recovered in the IDFC First case, the bank failed to bounce back. This highlights a changing preference where PSU banks are being favored over private banks in terms of ownership.
In contrast, the Nifty Next heat map showed more green. Capital goods like Siemens and ABB were running up, as were metals and oil companies. However, losses were seen in Hyundai, LTIM, and DLF.
Mover Of The Day
Persistent was a major mover of the day, dropping 6.3% due to AI-led disruption fears.
Sectoral Overview
The Nifty IT index was the worst hit, losing 4.74% today. Over the last month, it has lost 21%, and it is down 23.8% over the last year. This is a remarkable blow to an industry where many assumed nothing bad could ever happen.
The downturn in IT is leading to serious second-order issues, particularly in recruitment. These companies were once the largest recruiters at universities, but they have now stopped hiring and are not even replacing staff who leave. Many large companies have lost double digits of their workforce in recent months. This creates a snowball effect regarding how to absorb a workforce trained in skill sets that may no longer be in demand.
Real estate was also smashed down by 2.5%, with the services and media sectors falling over 1%. The only gainers—metals, energy, commodities, and public sector stocks—only saw a move in the second half of the day.
Sector of the Day
Nifty IT Index
The damage extended to large mid-caps like LTIMindtree, Tech Mahindra, Persistent, HCL Tech, and Coforge, which fell 6% to 7%. Even giants like Infosys and TCS were not spared.
U.S. Market
In the US, IBM dropped 13% following reports of alternatives to its code, while Capital One, American Express, Accenture, and Mastercard saw crashes of 6% to 9%. While top-tier tech names like Meta, Microsoft, and Google were hit, the second layer of the US market sustained the most damage.
Tweet Of The Day
Success in the markets requires overcoming behavioral biases. When structural changes occur, people are often dismissive due to recency bias, assuming a stable price will return. This leads to anchoring bias, where an investor stays stuck on their initial buy price, and eventually the sunk cost fallacy, where they refuse to sell a failing asset.
To combat these mind games, one must use a rule-based system or framework. To explore such structures, you can view various model portfolios and strategies at the link below.
