We’ve ended the month without much damage. The market’s performance this month has been relatively flat, although in the last couple of days, we’ve certainly seen some volatility. The markets have beautifully closed the gap that was created a few days ago and have retraced upwards. Now, let’s see where we go from here.
Today, we’re going to show you part of the second half of the video, which contains some data that may seem too good to be true at first glance. We’ll save that for the release
Where is the market headed?
Market Overview
Today, Nifty is up by 0.91%. After three days of consolidation in a narrow range, the market saw some movement yesterday, particularly on expiry day, where it closed the gap created earlier in the week and bounced back. We’re now back above 24,000 and trading in a similar range. A break above the recent high will likely be a significant trigger for the next phase. However, we’re still far from that level, and a break below yesterday’s low could signal a short-term retest of lower levels.
While Nifty is up 0.91% today, the broader picture remains flat. In fact, since July, we haven’t gained much ground overall. The market has moved sideways for almost five months now, with no significant gains or losses. Similarly, in the last month, from the third week of October to today, the market has barely moved. This suggests that there isn’t much bearishness at the moment, as we haven’t dropped lower.
Nifty Next 50
On the other hand, Nifty Junior is up 0.67%. It looks like a completely different chart compared to Nifty, as it has been on an upward trajectory, largely driven by the recovery in Adani stocks, which hold a significant weight in the Nifty Junior index. It’s now approaching a resistance point.
Nifty Mid and Small Cap
The Nifty Mid Cap index is moving within a small range, up by just 0.32% today. There hasn’t been any gap closure here, suggesting the market is relatively strong. When gaps aren’t easily closed, it often indicates strength in the short term. In contrast, FIIs have been predominantly selling Nifty stocks, which is evident in the data.
Small-caps have been showing stronger breadth, up by 0.79% today. These stocks have been on a steady upward trend for the past few sessions, even though the broader indices haven’t moved much. This indicates that the broader market may be more bullish than Nifty stocks.
At 17,700, the small-cap index is now less than 5% away from its all-time highs, which were around 18,600.
Nifty Bank Overview
Meanwhile, the Nifty Bank index is showing a very tepid performance, sitting within its consolidation zone. A breakout from this level could lead to further upside.
Advanced Declined Ratio Trends
The momentum trends for the CNX 500 stocks look good, with 334 stocks advancing and 258 declining. However, FIIs came back strongly yesterday, selling ₹11,700 crores worth of stocks, while DIIs managed to buy ₹8,700 crores – significantly less.
Nifty Heatmap
Sectoral Overview
In terms of sectoral trends, Pharma was the standout performer today, up 2.4%. It’s possible that Pharma could be taking the leadership position now, or this could be a shift towards defensive sectors. Adani Green stocks saw a massive 21% jump today, with Adani Sol rising 15%. Investors in Adani stocks have likely recovered all losses from earlier this year, and in some cases, they’ve exceeded their previous highs.
On the downside, stocks like Zomato, VBL, NHPC, Lodha, Chola Finance, and IRFC saw declines. The broader market, however, remained relatively flat, with Power Grid losing 1.2%, but no major losers overall.
Sectors of the Day
Nifty PSU Bank Index
A notable observation today is the churn happening in the market, with several sectors that had been beaten down over the past few months now starting to stage a comeback. Energy and commodities stocks, in particular, are seeing strong momentum after a difficult period. Auto stocks are also picking up, while real estate and PSU banks are taking a backseat today.
This sectoral rotation could lead to new leadership in the market, and it’s possible that December could turn out to be a positive month for Nifty.
Story of the Day : The Case for Gold: Why It’s Gaining Popularity
Now, let’s shift gears and look at some data that may surprise you. Over the last 10 years, how do you think Nifty has performed compared to Gold in INR terms? Most people would probably expect Nifty to have done better, given the widespread narrative around equities being the best asset class. But, surprisingly, Gold has outperformed Nifty over the past decade, rising by 204%, while Nifty is up by 182%. When you add dividends to Nifty’s returns, the gap narrows, but this data challenges the notion that equity is the only asset worth investing in.
Gold has historically been a hedge against market volatility. For instance, during the Covid crash, Nifty plummeted while Gold surged. So, in periods where equities are struggling, Gold can act as a reliable hedge, helping to protect your portfolio. While Gold may not compete with Nifty in terms of long-term returns, it serves an essential role as an insurance asset.
Gold has been gaining popularity recently, and central banks are adding it to their reserves at a steady pace. The RBI’s gold purchases have been increasing since 2016, with the central bank buying 70-100 tons of gold each year. This surge in demand is partly due to a reduction in import duties, which has removed the arbitrage that encouraged smuggling. As a result, people are now buying gold through legitimate channels, further boosting demand.
Gold ETFs have also seen a surge in interest, with newer players entering the market. The total holdings in Gold ETFs have been growing steadily, and this trend is expected to continue. The shift in buying behavior, particularly towards coins and bars rather than jewelry, indicates that more people are starting to see gold as an investment asset, rather than just a form of wealth storage.
Asset allocation has become a key topic of discussion among investors, particularly with the rise of social media and YouTube education. Investors are now realizing that diversifying their portfolios and including assets like gold is crucial for managing risk. In an increasingly volatile world, holding tangible assets like gold and real estate can provide a valuable hedge against market uncertainty.
Looking ahead, as global allocations to gold increase from less than 1% to perhaps 2-3%, we could see gold prices continue to rise. As a result, it’s worth considering adding gold to your portfolio, especially if you believe in its long-term value as a hedge.
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