Where is the market headed?
It has been a decent start to the week, with some sources suggesting that Iran is willing to let the Strait of Hormuz open, though nothing is very clear right now. Nevertheless, the market reaction suggests that there is some hope and optimism building up.
Today, there is a discussion about long-term performance, using the classical example of Warren Buffett and his company, Berkshire Hathaway, which has done extremely well for investors over the long term. Over the last 30 years, Berkshire has beaten S&P total returns by a wide margin. Looking at the data, the white line representing Berkshire returns and the green line representing S&P total returns show they have been together almost the same for the last 20 years.
However, in the last 10 years and five years, the index has outperformed by 30%. In the last two years, there has been a super outperformance by the index over the fund by 200%, and in this last one year, the fund is down 12 percent while the index is up 30 percent.
This highlights the dilemma of a long-term fund manager: if they take a call for 15 to 20 years and do not perform for 10 years, are investors going to be okay with that? Fund managers need to demonstrate that they are with the market or near about the market at all times; it is a tough business. Given the pedigree of Berkshire Hathaway, there is no reason to believe they will not perform well. However, when thinking about how the world is changing, with the free flow of money supply and artificial interest rates in the last 10 years, it seems the fundamental approach is faltering.
Market Overview
Looking at the markets, Nifty is nicely up 0.81%, recovering some of the damage done in the last three days, although it remains in negative territory on medium to long-term charts.
Nifty Next 50
Nifty Junior has recovered very well; it only had two days of fall and gained more than 1.3% today itself after a very good recovery on Friday. This looks much more positive than Nifty, with midterm and long-term trends being positive.
Nifty Mid and Small Cap
Midcaps are up 1.47%, almost erasing all recent losses, which tells of the strength in the bottom part of the market. Small caps are up 1.82%, almost reaching the highs of 2026. This data indicates that small caps, midcaps, and even Nifty Next 50 are willing to go up, whereas Nifty is still sluggish.
Bank Nifty
Bank Nifty is also sluggish at 0.31%, but it has not fallen as much and remains near highs, less than 10% or just about 10% away.
GOLD
In other markets, gold remains absolutely flat, and oil is maintaining $101. If the position were worsening, prices like $120 or $125 would likely be seen by now, but there is some sense of control near $100 on crude oil. There was disturbing news regarding the U.S. sanctioning a Chinese refinery to make sure Iranian revenue from crude oil drops. While China has been away from this war narrative, poking them could be catastrophic, but so far, crude oil is maintaining about $101, so we can stay a bit safe there.
Crude Oil
Advance Decline Ratio
The advance-decline trend was 447 to 52, which is a complete annihilation of sellers, with 90% of stocks moving up.
Heat Maps
There were some losses in Axis Bank and Shriram Finance, but very nice gains in Reliance, some IT stocks recovering, Sun Pharma leaping up massively, and Adani Ports and NTPC doing really well.
Nifty Next 50 also had good gains in commodity sectors like Vedanta, Hindustan Zinc, Varun Beverages on results, Adani Power, and Tata Power, as the energy sector is certainly doing very well.
Movers Of The Day
Among the movers of the day, Tanla moved up 20% on Q4 results and a dividend announcement, recovering smartly after being beaten down. Cohance is also up 20% on the news of a new chief and chairman coming in.
Sectoral Overview
Sectoral trends show a fantastic 2.6% gain on Nifty Pharma, which is nearing its previous highs with contributions from Sun Pharma, Gland, Biocon, Torrent, and Wockhardt. Real estate is up 2.46%; although it is still down 9.84% over the last one year, it is coming back with an 18% gain in the last one month, making it one of the highest gainers. Other top gainers include capital markets and India Defense.
On the daily chart, media, IT, metals up 1.8%, manufacturing up 1.69%, and commodities up 1.6% all showed good gains. FMCG and PSU banks were up half a percent, while private banks and financial services were flat. There were good gains and no losses in any sector for the day.
Sector of the Day
Nifty Pharma Index
U.S. Market
In the previous session of U.S. markets on Friday evening, there was a smashdown in Charter Communications, Comcast, Deere, Eli Lilly, and Lockheed Martin, with some down as much as 25% and 13%. Although the index was flat at 0%, the S&P 500 gained 0.8% and the NASDAQ gained 1.95%. Looking at the NASDAQ heat map, Nvidia is back at the top, while AMD and Intel are running like never before, with Intel up 23% and AMD up 14% in a day. These stocks could be part of the Weekend Investing U.S. stock strategy.
This is an amazing run, and that is exactly what momentum does; you will find winners when you are not expecting them. This is the design of the momentum strategy that causes this from time to time during a huge bull run. The rest of the market in the U.S. was also quite good, with only Apple being sluggish for a bit.
Tweet Of The Day
Regarding the Avis car rental case, a short squeeze caused the stock to go up from $100 to almost $800 after two hedge funds cornered the market. However, trees don’t grow to the skies. Even if only one buyer is cornering all the stock, there is a tipping point beyond which accumulation is pointless because they must sell at some point to realize the gain.
Short sellers who shorted at $150 to $100 would have seen their mark-to-market margins hit like crazy, and retail investors who thought the company might revive may now be stuck for years. Always know what game is going on and have checks and balances for when to get in and out. A 750% gain in three weeks followed by a 75% crash in two days shows how brutal markets can be. Stay safe from such adventures by diversifying and having an exit plan in place at all times.
