Where is the market headed?
A historical shift is underway in global finance. According to a recent report by the Financial Times, the European Central Bank has noted that gold has officially replaced US Treasuries as the world’s top reserve asset. Central bank reserves outside of the United States have swelled to 27% in gold. Renowned macro and global strategist Luke Grohman points out two critical trends emerging from this development.
First, while gold has become the premier global reserve asset, it is not replacing the US dollar. A common misconception is that gold is attempting to unseat the greenback; however, central banks are directing their reserves toward gold while keeping actual transactions firmly in US dollars. The preferred reserve asset is gold, and the preferred transaction currency remains the US dollar, meaning there is no overlap or conflict between the two functions.
From a technical perspective, gold is once again nearing its 200-day moving average (DMA). In March, when gold experienced a major slide, it found crucial support at this 200 DMA. It approached this level again just a few days ago.
Historically, purchasing gold at or near its 200 DMA has been a highly safe and reliable entry point. While the price can drop below this indicator in the short term, long-term data shows that purchases made at, near, or below the 200 DMA eventually deliver strong returns, especially on an INR basis. This insight makes gold a significantly less risky play than it was a few months ago. Historical chart arrows demonstrate that each time gold dipped below this moving average, it presented excellent accumulation opportunities for rupee gold, and the market is approaching that exact same zone once again.
Market Overview
Moving into the market update, investors are advised to read the full disclaimer before proceeding. Geopolitical confusion and tension persist on the Iran front, with further escalations occurring over the last few days, including the closure of the Kuwait airport. Fortunately, the domestic markets are not reacting too negatively. There is no bloodbath in the markets; instead, it is a period of waiting and watching.
Broader Market Indices
The Nifty ended the day down by 0.33%, while the Nifty Next 50 and Midcap indices also posted minor losses of nearly 0.37% and 0.38% respectively. Small-cap stocks remained flat.
GOLD
Meanwhile, commodity markets show rupee gold slipping to a rate of 15729, while crude oil is gaining ground.
Crude Oil
Brent crude has entered a previously created gap and is trading around $99 per barrel, which is certainly not great news for the broader economy.
Heat Maps
The Nifty heat map reveals only one major red region, which is the Information Technology space. Just two days prior, Nvidia CEO Jensen Huang stated that AI would probably not destroy jobs in the software sector. While software stocks initially rallied on that insight, they have now been dumped very hard just two days later.
TCS collapsed by 8.3% in a single session, Infosys dropped 4%, and HCL Tech, Wipro, and Tech Mahindra all closed firmly in the red. This beating was not restricted to Indian IT companies, as similar US software stocks were also heavily punished. In other sectors, ITC continues to look weak, shedding another 2% to bring its total price decline to more than 40% from its highs, which is becoming quite worrisome.
The Nifty Junior heat map presented a mixed bag with some unchanged stocks and a few green patches in DMart, Emami, certain PSU banks, and Adani stocks, while commodity and cement stocks took a beating.
Movers Of The Day
Among the prominent movers of the day, CarTrade surged by 9.29% following a rating upgrade from Kotak, signaling a potential bottoming-out situation for the stock.
On the losing side, TCS was the biggest laggard, dropping 9% and wiping out yesterday’s rapid gains. Such a sharp reversal indicates deep underlying weakness, and if TCS breaks its recent low, it could head even lower.
Sectoral Overview
Looking at broader sectoral trends, the IT sector fell 5.5% in a single session, pushing its monthly performance down to minus 7% and its yearly return to minus 22%. Real estate also lost 1.3% on the day, while FMCG slid 1%. Over the last month, FMCG has lost 5% and is down 15% over the past year, offering no escape from losses for investors in that space.
Most other sectors remained flat, with the lone standout being the Nifty PSU Bank index. PSU banks rallied in the second half of the day to gain 1.7%, bringing their one-year return to a very attractive plus 22%. For the year gone by, metals remain the absolute best-performing sector with a massive 47% gain, followed by capital markets at plus 29%. The overall drag on the IT sector today was heavily driven by heavyweights like TCS, Persistent, LTIMindtree, Coforge, and Tech Mahindra.
Sector of the Day
Nifty IT Index
U.S. Market Updates
In the previous US trading session, individual stock performances were highlighted by Marvell Technology, which skyrocketed 32% in a single day. Other notable gainers included Lumentum Holdings, Applied Materials, Microchip Technology, and Cisco, which all climbed between 5% and 13%.
The major indices were relatively stable; the S&P 500 closed flat, the Dow Jones Industrial Average gained half a percent, and the Nasdaq 100 mirrored that move. The Russell 2000 staged a notable turnaround to post a 0.9% gain. While some of these US equities are featured within the Weekend Investing US stock strategy, these mentions are strictly for informational purposes and do not constitute formal stock recommendations.
A closer look at the Nasdaq 100 heat map shows that the semiconductor and AI infrastructure spaces managed to stay green. However, tech titans Microsoft and Google were hit badly, falling 4% and 3% respectively. Retail giants Amazon and Walmart were also smashed down. Even Nvidia ticked lower by 0.69%. On the positive side, Apple managed a 2.9% gain, alongside upward moves from Broadcom (AVGO), ASML, Cisco, and Qualcomm.
Tweet Of The Day
Reflecting on market dynamics, an analysis of an 11-year chart comparing two major US ETFs offers a powerful lesson in sector rotation. The chart plots a Software Services ETF, represented by a white line, against an AI ETF, represented by a blue line. For ten years, these two sectors moved completely in sync with one another. However, a striking divergence took place right after September 2025. From that point onward, the AI ETF surged more than twofold, while the traditional Software Services ETF declined by about 20% to 30%.
This divergence is a textbook example of how sector rotations happen. Investors often assume that sectors moving together historically will continue to do so indefinitely, but structural shifts can cause one specific pocket to completely take off. This phenomenon has been clearly visible across semiconductor, chipmaking, and data center stocks over this period. It underscores the absolute necessity for investors to remain completely unbiased when a sector breaks out, as it is impossible to predict just how powerful the resulting momentum might be.
