Where is the market headed?
Another day begins, and once again a big shock comes from Mr. Trump’s tweet. He has announced that the US will put a 100% tariff on all non-generic pharma imports. Only those companies that are currently building plants in the US will be spared. Any other pharma product that enters the country will face these tariffs starting next week.
Most Indian pharma exports are generic in nature, but some companies will still get impacted. The pharma industry usually begins with generics and then moves to more advanced products and licenses. That entire value addition process can suffer badly unless Indian companies have manufacturing units in the US.
Back home, the Indian markets are in a tizzy. Our ministers have been in Washington D.C. for the past four days and keep releasing press reports saying discussions are going well. But the tone of those press notes shows that India is probably on the weaker side of the negotiations.
Market Overview
Looking at the charts, the Nifty lost nearly 1% today, erasing almost all the gains made at the end of August. September has been a flat month, and history tells us September and October are usually tough for global equities. Hopefully, we don’t see a bloodbath, but we must be prepared.
Nifty Next 50
The Nifty Junior fell sharply from 70,400 to 67,001 in just four days, a 4.68% fall.
Nifty Mid and Small Cap
Midcaps dropped 1.94% and Small caps 2.14%.
Bank Nifty
Banks too lost 1.07%. The damage has been broad-based.
GOLD
Gold, on the other hand, is sitting near all-time highs at ₹11,341 per gram, adding another 0.07% today. It refuses to fall despite every correction. Many investors miss out on such rallies by always waiting for the perfect dip to buy.
Advance Decline Ratio
The market breadth was extremely weak today with only 42 advances against 458 declines. Motors, and Aisha Motors held some ground.
Heat Maps
Pharma stocks like Sun Pharma, Cipla, Zydus, and Dr. Reddy’s were down. IT stocks were hit even harder, while auto and steel also fell. Even recent gainers like Asian Paints, Wipro, Bajaj Finance, and Trent slipped. Only a few names like ITC, Reliance, Tata Motors, and Eicher Motors held some ground.
Mover Of The Day
Idea was in focus as the Supreme Court once again deferred its verdict to October 6th. The stock had risen from ₹6.20 to almost ₹9 on hopes that its dues to the government might be converted into equity, but today it fell 7.6% after the delay.
Sectoral Overview
Among sectors, there was no green anywhere. Infrastructure was the least hit at -0.43%, while IT was the worst at -2.45%. Tourism, defense, pharma, metals, PSU banks, and manufacturing all saw heavy losses.
Sector of the Day
Nifty IT Index
Nifty India Tourism Index
Tourism stocks have now fallen for eight straight days, with Chalet Hotels, Indian Hotels, BLS, and Jubilant all down. Investors are getting worried as they are not seeing returns despite high inflows in recent months. We will need to watch the inflow numbers at the end of this month.
Tweets Of the Day
Today’s tweet of the day was about Exter’s Pyramid, an important concept in finance. It explains the hierarchy of monetary assets, with gold forming the most stable base of the inverted pyramid. Everything else, whether real estate, derivatives, or equities, sits above gold as a derivative of it. Governments can always revalue gold to reset the system. It is worth reading more about this if you haven’t already.
Another lesson came from Accenture’s earnings. While headlines shouted that the company beat revenue estimates and declared dividends, the stock price kept falling because of weak guidance. This shows that stock prices often move before the news reaches the public. By the time you read a headline, the stock has usually already reacted. Never jump into a stock just because of a flashy headline.
