Where is the market headed?
The trading session on 27th May was marked by extreme volatility, resembling expiry-day movements. Sharp swings throughout the day—early declines, mid-morning rallies, afternoon dips, and another late recovery attempt—made it challenging for short-term traders to stay profitable.
Market Overview
We haven’t really lost much ground, but crossing the 25,000 mark is proving to be quite difficult. The market remains stuck in the 24,500 to 25,100 zone, a range we’ve been trading in for nearly 12 sessions now.
Nifty Next 50
Nifty Junior was relatively flat, ending the day down by 0.27%.
Nifty Mid and Small Cap
Mid caps were also quite flat, closing 0.2% in the green. Small caps were even more subdued, inching up just 0.11% — essentially flat.
Bank Nifty
Bank Nifty also ended the day lower, down by 0.39%.
GOLD
Gold also slipped today, ending 0.98% lower.
Advance Decline Ratio
The Nifty 500 advanced-decline ratio stood at 231 advances to 268 declines.
Heat Maps
In the Nifty heat map, Jio Finance led gains with a 3.4% rise, boosted by breaking news of a mutual fund tie-up with BlackRock. IndusInd Bank also gained, continuing its upward trend after initial concerns about past issues were fully discounted a month or two ago, marking the stock’s bottom.
Meanwhile, HDFC Bank, ICICI Bank, Axis Bank, and Kotak Bank declined. IT stocks, Reliance, cement, steel, Autos, and FMCG sectors were down, with pharma and infrastructure stocks in the Nifty Next 50 remaining mostly flat.
Sectoral Overview
The defense sector continued its strong performance, rising 1.06% for the day, showing resilience even as most of the market declined. PSU banks and Real Estate recorded slight gains, along with MNC pharma stocks. However, the rest of the market was down, with FMCG hit hardest, falling 0.88%. FMCG has been volatile, alternating between gains and losses over the past four days. Commodities and Autos were weak, and consumption stocks also declined, reflecting broad weakness across sectors.
Sector of the Day
Nifty FMCG Index
FMCG stocks have been in a flattish territory since mid-April, down 0.88%. Key names like ITC, United Spirits, Godrej Consumer, United Breweries, and Britannia have all lost some ground.
Nifty Ind Defence
The defense index reached another new high, led by Mishra Dhatu, GRSE, Cyient DLM, Bharat Dynamics, and Astra Microwave. Demand in the sector remains strong, with the index climbing from a March first-week low of 5,000 to 8,600.
Story of the Day: No Trend Lasts Forever
The timeless wisdom says no trend lasts forever — a lesson that every investor must heed. For four decades, the 20-year Treasury bond index marched upward, making bonds a cornerstone of portfolio construction. The classic 60/40 equity-bond split became a global standard, with advisors recommending a significant allocation to bonds because yields were steadily falling and bond prices rising.
But since 2020, this trend has reversed: yields are rising and bond prices are falling. The popular U.S. bond ETF TLT hasn’t generated returns for over 12 years and now finds itself back at 2013 levels. Allocating 40% of your portfolio to an asset that hasn’t delivered gains in over a decade means inevitable underperformance.
Yet, changing this mindset will take time. Investors will need to reconsider allocations — perhaps shifting to a balanced mix of bonds, gold, or other assets. Recency bias keeps people anchored to recent trends, creating dangerous complacency.
The bond market now sits like a ticking time bomb. Should investors rush out en masse, bond yields could spiral out of control, potentially destabilising the economy. Conversely, if large inflows do arrive, it might signal excessive money printing or mass equity sell-offs — scenarios that also pose risks.
This upheaval reflects a broader truth: the world is evolving rapidly. Technology, inflation, interest rates, and geopolitics are reshaping macroeconomic regimes. What worked for 30 years in markets or sectors—whether public banks, consumer goods giants, or gold—may no longer hold true.
Being nimble and curious is more vital than ever. Blindly sticking to dogmatic strategies can lead to painful losses. The so-called ‘safe’ assets like U.S. Treasuries are no longer risk-free; their credit rating downgrade and years of zero returns reveal the limits of “safety without returns.” This redefines how risk is benchmarked.
Overconfidence from long winning streaks is a common pitfall. The greatest dangers emerge when everyone agrees on the same playbook — be it in stocks, bonds, or sectors. Staying vigilant to these shifts and avoiding herd mentality can safeguard portfolios against surprises.
As the market attempts to recover from recent falls, investors face crucial questions: Are we still in a long-term bull market, or are we forming a peak before a downturn? How one answers this will shape investment decisions moving forward.
The key is to adopt a structured, flexible approach—ready to adapt with the trends rather than being anchored by past successes.
Is your portfolio ready to adapt to changing trends? Share your thoughts in the comments below! Thank you for reading — see you in the next update.
WeekendInvesting launches – The Momentum Podcast
This episode of THE MOMENTUM PODCAST features Manubhav, a third-generation real estate professional, sharing his unique journey navigating both worlds.
Discover:
✅ FROM PROPERTY TO PORTFOLIO: Manubhav’s transition from his family’s established real estate business to exploring equity investments.
✅ MARKET WISDOM: His candid experiences with market swings, including COVID-19’s impact on his SIPs, and lessons learned from F&O and smallcase.
✅ THE BIG COMPARISON: A fascinating look at real estate vs. equity returns, featuring real-world numbers from his family’s 40-year property investment.
✅ UNCOMMON INSIGHTS: Why gold is a family favorite and the surprising state of equity investing in smaller Indian towns.
