The weakness that we saw on Trump tariffs yesterday has completely wiped out. In fact, we’ve crossed the budget day high, which is a very good sign from a markets perspective. I think all the recent weakness has been taken care of. Now, of course, it will depend on whether we are going higher in terms of whether we can make a higher low and a higher high going forward or whether there’s more time to go in terms of consolidation—that of course we don’t know. But the situation on the tariff front has gotten diluted in the last 24 hours. There has been a one-month postponement of the tariffs on Mexico and Canada, and China is also positioning itself to make some counter tariffs. So, I think these are just bluffing kind of positions that are happening to make the other party respond—nothing more than that.

Today, we’ll talk about strength and weakness and how the weakness destroys your portfolio and how staying in strength protects your portfolio. We’ll take a look at a lot of data and how our behavior toward this particular data actually impacts our investing going forward.

Where is the market headed?

Market Overview

This is the first time we’ve managed to cross the current moving average on the chart since the 2nd of January. About a month has passed, and here we are. The last time this attempt failed miserably. We don’t know how things will go from here—whether we’ll consolidate more or continue upward to challenge the 24,150 mark. We’ve already made a fast move from 22,800 (or 22,750) to 23,750, a thousand-point move in a very short time. Many people panicked and sold off here, and now they’re confused about whether they should buy back or wait for more opportunity. This kind of confusion is always present in the market. Without a clear rule to follow, you’ll always find yourself regretting your decisions.

Nifty Next 50

Nifty has gained 1.6%, and Nifty Junior is up by 1.54%, stabilizing right now.

Nifty Mid and Small Cap

Mid-caps have risen by 1.38%, but they still haven’t managed to get above the budget day high. They’ve filled yesterday’s gap but remain weaker compared to large caps. Small caps are still the weakest of all the indices, though they’re up by 1.14%, and there are no complaints there either.

Nifty Bank Overview

Bank Nifty is looking like a great mover, with a 1.9% rise. It has broken out of the congestion zone between 49,600 and 48,000, and has now crossed the 50,000 mark, which is significant. Gold is up 0.8%. Despite concerns about gold crashing because of the tariff situation, nothing of that sort is happening. Indian gold prices have gone above 83,000, including GST, and it seems this asset class has been rising consistently over the last month or two.

Advanced Declined Ratio Trends

Momentum is firmly in favor of the advances today, with 356 advances compared to 145 declines.

Nifty Heatmap

This is probably the greenest screen we’ve seen in a long time. Reliance is up by 3%, HDFC Bank by 2.5%, State Bank of India by 2.5%, Kotak Bank by 2.5%, UltraTech Cement by 3%, and Tata Motors by 3.3%. Even Tata Motors, one of the weakest stocks at the moment, is up by 3.3%. There has also been a remarkable comeback in the capital goods sector, with ABB up 8.3%, Siemens up 3.7%, and BHEL up 5.3%. Public sector enterprise stocks, which had dropped yesterday, have seen a strong recovery today—HAL is up by 5.7%, REC and PFC are both up by 5%. It’s a fantastic comeback. Some of the stocks that were running yesterday have cooled off, but overall, it’s a broad-based positive move across the market.

Sectoral Overview

All sectors except consumption and FMCG are up today. The public sector enterprise stocks are leading the charge, followed by oil and gas, capital markets, PSU banks, infrastructure, defense, energy, private banks, and financial services—all up by more than 2%. In the last week, real estate has run up by 10.7%, tourism stocks are up 6.8%, and consumption stocks are up by 6.1%. These sectors have been leading over the past month, though we still don’t have much green in terms of overall gains for the last month. If this trend continues, things could turn around quickly, but for now, it’s been a good day.

Sectors of the Day

Nifty PSE Index

Story of the Day :Don’t let weakness destroy your portfolio.

The background to this thesis is that when you see the market from a value perspective, you want to buy at the lowest value, right? We’ve all heard it: buy low, sell high, buy into weakness, sell into strength, and buy when everybody’s bleeding and sell when everybody’s greedy. These sound nice, but they’re very difficult to implement. How much blood do you want to see before you decide to invest? How much greed do you want to see before you sell your positions? A week ago, we saw blood in the market, but was it enough for you to put in a significant amount? This is where it gets subjective—how do you quantify it?

A more objective approach is to use data to determine the market’s trends, what’s going up, and what’s coming down. Relying on data rather than guessing about whether this is the bottom or the top will keep you more grounded. Human psychology towards investing tends to make us afraid when a stock goes up, fearing it will fall down, and overly optimistic when a stock falls, hoping it will go up. My thesis is that if a stock is falling down, you should be very afraid because you are losing money. If a stock is going up, you should not be afraid; you should be happy that you made a good investment.

This behavior is what causes most people—98%, in fact—to not perform at their best. On one side of your brain, you’ll be telling yourself the stock is going up, so you should sell it and book profits. On the other side, when the stock is going down, you might tell yourself it will go up again, so you should buy. The flip side of this thesis is that if a stock is going up, it is gathering momentum and is in a trend. It is likely to travel in that direction for some time—sometimes for a month, sometimes for six months, or even five years. You don’t know for sure, so why would you jump off a moving train when you’ve been lucky enough to board it? On the other hand, if the train feels like it’s about to break down, you need to jump off before it crashes. This is the kind of market awareness you need: recognizing strength and weakness to manage your portfolio effectively.

If you can embrace this idea of aligning yourself with strength and quickly discarding weakness, you’ll see a significant difference in how your portfolio performs. To explain this, imagine walking on the road and falling into a ditch. If the ditch is just 3 feet deep, you’ll easily get out, maybe scratched, but you’ll move on. However, if that ditch is 30 feet deep, it becomes much harder to get out. Similarly, if you let your stocks drop 60%, 70%, or 80%, you’ll need a five-bagger or a ten-bagger just to recover. But if you cut your losses early, when a stock is down 10-20%, you can move on to other stocks that are doing well without being hurt too badly.

So, re-think your approach. Instead of waiting for deep losses to recover, booking small losses and moving on to stronger stocks is usually the better choice. It’s a strategy that will help protect your portfolio in the long run, and prevent you from getting stuck in that deep red zone that’s difficult to recover from.

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