Where is the market headed?
It was another dull day in the market, continuing a dull start to the week. Yesterday we saw a dip, and today the market was also slightly down. The broader market remained stagnant, though the Nifty dipped a bit. Currently, the market lacks any real trigger and is waiting for one, which has not yet materialized.
Specifically, the market is anticipating the U.S.-India trade deal, and this waiting has led to some positions being pared and a feeling of impatience among investors. Today was also an expiry day, which added some pressure to the market.
While Asian markets have bounced slightly, overall, there seems to be no escape from the current weakness. Interestingly, the US market appears to be diverging from Asia. US markets performed quite well yesterday with a very strong bounce, but this strength was not mirrored in the Asian markets, indicating a divergence in trends. We are, as mentioned, waiting for some specific cues to restart momentum.
A tweet shared by Alok this morning highlighted the Nifty Small Cap 250 index, which has now touched the same level three times before. Historically, when the index has reached this region of the 16,500-16,600 range, the market has been reasonably oversold.
It is possible that the market will attempt to build up from this point if some positive tailwinds emerge. If not, we may consolidate here, and bad news could trigger a sharp breakdown, potentially a significant leg down. However, after spending so much time around this level, we may not break this support, though we cannot know for sure. The structure is currently weak, but it is also oversold, which defines the current market sentiment.
Market Overview
The Nifty was down for the third consecutive day, dropping by 0.29%. We are moving down on a leg, and this descent will end at some point. Perhaps we will go and clip an average, or maybe move up from here, but the movement is a gradual decline, not a sharp fall.
Nifty Next 50
The Nifty Junior was completely flat, down 0.26% after three massive down days. Today’s movement was negligible compared to what we’ve seen recently, and it’s essentially a rest after the fall, with potential for further weakness as the structure remains quite weak.
Nifty Mid and Small Cap
Mid-caps were up 0.26%, and small-caps were up 0.11%, both showing no major up move but merely holding their ground. As noted in the first frame, the small-cap index is potentially near some support in this region and is currently oversold.
Bank Nifty
The Nifty Bank was also completely flat, down 0.03%. Overall, the market is going nowhere; it is a wait-and-watch scenario.
GOLD
Gold moved up yesterday after India’s equity market hours but has since flattened out. It is currently at 12,550 per gram, which is a very reasonable level considering the highest point achieved was near 13,100. This places gold within a stone’s throw of its all-time high again.
SILVER
Silver was also slightly down by half a percent, with no major movement.
Advance Decline Ratio
The advanced-decline trends were very mixed throughout the day, showing choppiness with fluctuations in advances and declines. The entire day was spent chopping around the median line, ending with advances (243) and declines (257) being nearly equal.
Heat Maps
The Nifty heat map was primarily supported by State Bank of India, SBI Life, Shriram Finance, Bharat Electronics, Hindalco, and Dr. Reddy’s. Weak segments included Tata Motors, TCS, Infosys, HDFC Bank, ICICI Bank, Bajaj Finance, and Kotak Bank, all moving down. Additionally, the entire FMCG group, including hindustan Unilever, ITC, and Nestle, moved down.
In the Nifty Next 50 heat map, there were bigger gains in commodities, with Vedanta and Hindustan Zinc moving up, along with PSU Banks like Canara Bank, Bank of Baroda, and PNB, and some other finance companies such as Chola Finance and Bajaj Holding. Godrej Consumer Products and Britannia were also gainers in the FMCG space. Stocks that were moving down included Mazdock, Enrin, IOC, BPCL, LTIM, and Naukri, along with REC and Bajaj HFL.
Mover Of The Day
In the Mover of the Day segment, Orient Electric, a stock that had crashed from 200 to 150 a few days ago, suddenly shot up by 20%. This behavior is typical of low-liquidity, smaller-cap stocks. It is possible that a forced sell-out by a larger player caused the initial crash, and once the selling was overdone, a small amount of buying was enough to bring the stock back up. These kinds of games can be played in smaller-cap and micro-cap stocks.
Sectoral Overview
Sectoral trends were mixed. Real estate saw good gains after a long time, up 1.6%. PSU Banks were also up 1.4%, and Metals and Pharma gained nearly half a percent. On the downside, IT lost 0.57% and Media lost 0.8%, with the rest of the sectors being mostly flat.
Over the last month, the best-performing sector is PSU Banks with 8% gains, and the worst performing is Media with approximately 7.5% loss. Central PSEs and Real Estate have also lost 3% to 4% in the last month.
Sector of the Day
Nifty Realty Index
Real estate stocks have been battered in the last four or five sessions, making today’s 1.6% up move a relief day, with Anant Raj, Phoenix Mills, Brigade, Godrej Properties, and Sobha moving up in this sector.
U.S. Market
In the US market segment, the S&P 500 showed a fantastic gain of 1.5%. The Dow was up by a lesser margin, while the NASDAQ was up by almost 2.6% to 2.7%, and the Russell index gained nearly 1.9%. These are fantastic gains for the US market after a tough time in the last week.
Over the last month, the Russell is still down 4%, and the NASDAQ is down 1.4% and 1.2%, respectively, but the last day and last week are looking quite good. The US market is giving mixed signals in that it is not readily succumbing to the bear pressure.
Broadcom was up 11%, Tesla gained 6.8%, and Alphabet and Advanced Micro Devices were some of the stocks racing hard in the previous US session. Some of these stocks could potentially be part of the Weekend Investing US stock strategy, but please note these are not recommendations, and the disclaimer applies.
S&P 500 Heatmap
If we look at the S&P 500 heat map, Google, Nvidia, Apple, Evgo, Meta, Amazon, and Tesla were the big gainers driving the S&P 500 move.
Tweet Of The Day
In the Tweets of the Day segment, a report from J.P. Morgan suggested that oil could potentially go back to $30 by 2027. This would be a huge deal for India if it were to happen. Both J.P. Morgan and Morgan Stanley have reportedly released reports indicating that global crude oil production is increasing so much that the price could drop from the current $60s to $30s in the next couple of years.
If this were to happen, it would be a huge boon for Indian finances. While I am not sure if this would lead to lower prices at the pump, as the government has completely delinked global prices from domestic prices due to their financial compulsions, it would be a great boost for our fiscal deficit and trade deficit, and it could also help our currency.
The fact that two major research houses are saying this makes a strong case for the possibility, even if the outcome is uncertain. This is certainly a very positive long-term prospect for India if it materializes.
