Where is the market headed?
There is now only one day remaining before the budget, and the market appears to be coiling in anticipation of some good news. A significant milestone has been reached as the market has crossed the two-day high on the Nifty. This serves as the first sign of thawing in the bear phase that has recently persisted.
Consider a recent tweet regarding the historical perspective of gold. While many are discussing gold at 5,500 or 5,600 as being too high, history provides necessary context. Since the 1970 bottom, there have been two major rallies.
The first ran from 1970 to 1980, lasting ten years, during which gold prices in dollar terms increased 24 times. This was followed by a twenty-year lull, largely because central banks in Canada, the US, and the UK engaged in an organized and calculated sell-off. This created a supply overhang that led to consolidation until the year 2000.
The second historical rally began in 2000 and lasted approximately ten to eleven years, resulting in an 8x rise. After the 2011 peak, gold consolidated again, dropping from 1950 to 1050. The third phase began in 2016. Currently, the price is up 5.2 times and is entering its tenth year.
Given that previous rallies lasted ten to eleven years, there is a likelihood that gold may approach a price point between 8 times and 24 times in the next 24 months. While the exact timeframe is unknown, this is a reasonable approximation based on the assumption that previous sample sizes have implications for the current move.
Market Overview
Looking at the markets, the Nifty showed a minor gain of 0.3%, moving above the two-day high. Consequently, both short-term and long-term trends are now positive.
Nifty Next 50
The Nifty Junior also rose by 0.3%, showing a very nice recovery with positive short and long-term trends.
Nifty Mid and Small Cap
Mid-caps remained relatively flat at 0.11%, while small-caps stayed nearly unchanged at -0.06%.
Bank Nifty
The Nifty Bank rose 0.6%, placing it very near all-time highs; any positive budget announcements could push it to a new peak. Short, mid, and long-term trends for the Nifty Bank remain very high.
GOLD
As of 4:30 PM on January 29th, gold is at 17264, up another 1.7%. Although it has come off its highs, trends remain very positive across the board.
SILVER
Silver is up 0.74%, though it has slowed down over the last three days compared to gold and has not yet surpassed its previous peak. Nonetheless, silver trends remain extremely positive.
Advance Decline Ratio
The advance-decline trends stood at 189 to 311, indicating some declines today despite the front-end indices performing well.
Heat Maps
Specific stock movements included gains for ONGC, Coal India, L&T, Adani Ports, NTPC, and Axis Bank. Conversely, Asian Paints fell for a second day, joined by Maruti, TCS, Mahindra and Mahindra, and SBI Life.
Within the Nifty Next 50, Canara Bank dropped 4.7%, likely due to profit-booking ahead of the budget. Other declines included Solar Industries, Naukri, DMart, Divi’s Lab, Shree Cement, and Bank of Baroda. On the positive side, Adani stocks, Tata Power, Jindal Steel, Siemens, Motherson, DLF, and ABB—which saw a massive 8.5% jump—all performed well.
Mover Of The Day
The mover of the day was Hindustan Copper, which experienced a sharp 20% rally fueled by a rise in precious and industrial metals. Just two days ago, Hindustan Copper was at 500 to 550 rupees; it is now at 760. As a disclosure, Hindustan Copper is held in many of the company’s strategies, though this is not a recommendation.
Sectoral Overview
Sectoral trends showed the Nifty Metal index racing up 3%, followed by Energy at 1.8% and Commodities at 1.5%. CPSCs and private banks rose between 1% and 3%. The defense sector was down today, but this followed a humongous move yesterday and represents a single day of profit-taking. FMCG lost 0.9%, Pharma dropped 0.8%, and PSU banks and IT were also mildly down.
Sector of the Day
Nifty Metal Index
U.S. Market
In the US metal space, stocks like National Aluminium, Tata Steel, Vedanta, and NMDC are running hard. In the previous US session, the Russell index was smashed down 0.5%, while the NASDAQ continued to gain ground. Intel Corporation rose 11%, Texas Instruments rose 10%, and AT&T, UnitedHealth, and CVS were up between 3% and 4.5%. Some of these are part of the Weekend Investing US stock strategy, though these are not recommendations.
The NASDAQ heat map highlighted Intel at 11%, MU at 6%, and Nvidia at 1.5%, while Palantir, associated with Trump followers, was down 5.04%.
Tweet Of The Day
An interesting chart to monitor is the US Dollar Index. The US Dollar is currently falling against a basket of major currencies including the Euro, Yen, Pound, and Swiss Franc. Simultaneously, the Indian Rupee is falling against the US Dollar. This suggests a technical breakdown of the dollar, which may drop from 96 to around the 70 level in the coming years. Such a move would likely send significant money toward emerging markets and precious metals, which gold may already be pricing in.
