Where is the market headed?
The global market landscape is witnessing a notable shift as India slips on the global market cap list. After previously positioned to challenge for the number four spot, the country has now dropped to the number six position. Taiwan, with a population of perhaps less than 30 million, has crossed India in valuation. The Taiwanese market now stands at 4.95 trillion dollars, while India follows at 4.92 trillion dollars.
India is certainly slipping, and perhaps the country could have been better prepared or taken more measures to prevent this. Current discussions regarding necessary actions span across various areas, including tax policies and oil exploration, highlighting that there is a lot to be done.
However, past history demonstrates that whenever the government and the economy find themselves in a bad shape, some new, out-of-the-box thinking happens to propel the country onto a new trajectory. This hope cannot be given up. Even though some time has been lost, starting now means nothing much is truly lost, despite currently being on the edge of losing the number sixth position as well, sitting just about level with South Korea on this front.
Market Overview
Turning attention to the daily charts, there is still no official confirmation that a trade deal has concluded. President Trump has stated that 95% of the deal is done and that he is still working on the remaining 5%, while simultaneously launching bombings south of Iran on the side. Readers are reminded as a standard disclaimer to read fully and only then move forward with this information.
Given these real-world situations, the Nifty decided not to stick at its day’s high and ultimately gave up all its gains for the day, closing down by 0.49%. The index had reached beyond 24,000 during the session but closed at 23,913.
Broader Market Indices
While nothing much was lost in the grand scheme, the momentum that started yesterday seems to be wobbling already. Looking at other market indices, the Bank Nifty gave up some of its previous gains, which is acceptable considering it was up by 2% yesterday.
Small-cap indices finished marginally up by 0.2%, mid-caps gained 0.45%, and the Nifty Next 50 closed higher by 0.18%.
GOLD
Meanwhile, the gold market remained extremely flat, down 0.58% at 16,000 rupees per gram.
Crude Oil
Crude oil, which took a gap down and moved lower throughout the previous day, inched up a bit by 2.77% following the Iran strikes by the US Air Force.
Heat Maps
The Nifty heat map appeared largely red today. Banks gave up some of the gains they achieved yesterday, and several big players like Reliance, Bharti Airtel, ITC, TCS, and Wipro also gave up their gains.
On the positive side, Adani stocks ran hard all through the day, accompanied by certain energy and metal stocks that performed all right.
Within the Nifty Next 50 space, strong performances were visible from Adani Power, Adani Green, and other Adani entities, alongside Tata Power, Vedanta, Hindustan Zinc, Ambuja Cement, and Tata Capital. This green patch is largely tied to a new government ruling stating that all solar installations must be locally sourced, meaning companies can no longer import solar cells.
Movers Of The Day
In the daily mover segment, Adani Total Gas rallied nearly 9% as the company is hiking CNG prices in Delhi, a move that also caused IGL and MGL to rally.
Conversely, Concor moved hard in the opposite direction, dropping nearly 9% on the back of weak fourth-quarter results.
Sectoral Overview
In sectoral trends, there was not too much to talk about outside of the bullishness in Nifty Metals. The metal sector is currently the best-performing sector for the year, boasting a 46% gain. Minor gains were also recorded in Nifty Energy, Nifty Commodities, and capital markets.
On the losing side, services, private banks, tourism, and financial services lost 0.6%. The strength of the metals index, which is trading very near its all-time highs, was powered by stocks like Adani Enterprises, Vedanta, National Aluminium, Lloyd’s Metals, and Steel Authority of India. Across the globe, US markets were closed on the 25th of May, leaving no data available from that region.
Sector of the Day
Nifty Metal Index
Tweet Of The Day
An interesting dynamic is playing out in the global financial markets, as highlighted in a recent chart. The data compares the S&P 500 total returns, which includes dividends and everything, against the performance of Warren Buffett’s company, Berkshire Hathaway. Over the last year, a yawning performance gap of a phenomenal 30% has emerged between the two. The broader market is up nearly 26%, while Berkshire Hathaway is down 5% over the same twelve-month period.
Looking back over a longer ten-year period, the S&P 500 total return sits around 370%, whereas Berkshire Hathaway is near 270%, representing an immense 100% gap over a decade. This proves that an immense amount of underperformance can sometimes happen to even the best of managers.
This setup is shaping up to be the battle of the decade. Berkshire Hathaway is currently sitting on 30% cash, creating a cash pile closer to 300 billion dollars, which represents the largest treasury holdings anyone currently possesses. This situation will serve as a massive case study for years to come to see how it finally pans out. Investors will watch whether the markets eventually fold, allowing Warren Buffett to once again catch the exact bottom of the market, or if the markets will keep running to make this performance gap wider and wider. This is a very classical sort of challenge that the company has taken upon itself, and market participants are encouraged to share their thoughts and comments on the matter.
