Where is the market headed?
If you look into at the oil chart for the last 80 years, you can see three distinct phases. One phase lasted until 1978, followed by a range between $10 and $35. For the last 18 to 20 years, we have been stuck in a specific range.
From a purely technical chart perspective, it is important to consider what happens if this range is broken, especially as oil production has peaked. While there is talk of oil demand also peaking by 2030, the contrast versus other commodities is stark. Oil has not really gone anywhere; the same price available in 2008 is available now. Despite massive money printing and inflation over the last 18 years, oil remains at the same price. Essentially, we have taken advantage of inflation-adjusted oil for years, but eventually, this may come back to bite us.
The estimate for the RBI is $80 a barrel for this year. However, oil has been elevated this week, moving from the 90s to $114 or $115 in the morning before cooling off slightly. If these prices sustain for even a few more months, it will cause significant distress for the Indian balance sheet.
This is an issue that often gets ignored. No major strategic reserves have been built in recent decades, and energy dependence remains heavily focused on imports. The impact of this is visible in the rupee, which collapsed to 95.2 this morning. These are worrisome macro events for the market, yet it is not entirely bad; there are still opportunities to invest.
Market Overview
Looking at the charts, it is very interesting that while the Nifty fell below 24,000 to 23,800, it recovered back to nearly 24,000. The quick recovery of the index on a day when the rupee was collapsing and oil was rising dramatically shows a reasonably resilient outcome. We saw a 0.74% loss today, but we remain in the same range held for the last few weeks, which is the only good news currently.
Nifty Next 50
The Nifty Junior was down 1.24%, and the short term has become negative. However, long tails on the charts show recovery from the bottom, indicating that buying comes in as soon as major selling takes over.
Nifty Mid and Small Cap
Mid-caps also recovered slightly after a 2% fall to close near minus 1%, while small-caps fell 0.44%, showing an even better recovery from 16,560 to approximately 16,700.
Bank Nifty
The Nifty Bank lost 1%. While some PSU banking results have been disappointing, some private banks have done reasonably well, though the Nifty Bank looks the most sluggish of all the charts.
GOLD
Gold saw an uptick today, rising 1.8%. In conjunction with the fall of the rupee, gold is back near 15,000 per gram, maintaining a steady sideways move.
Crude Oil
Crude oil has been jumping; it is currently at minus 2.16% from yesterday’s close, but it was up massively yesterday and earlier today. We are at a crucial point where a breakout from this zone could be catastrophic, so there is hope that ceasefire efforts will reach fruition.
Advance Decline Ratio
Regarding advanced decline trends, there were 363 declines to 136 advances. Throughout the day, advances tried to make up the loss but could not reach a 50-50 mark.
Heat Maps
Selling was seen in Hindustan Unilever, which was sold into despite results that were perhaps better than expected. Eternal also saw selling after recent blockbuster results, and both private and PSU banks lost ground. Conversely, Sun Pharma and Infosys have been gaining gradually, and Bajaj Auto looked up today at 4.7%.
In the Nifty Next 50 space, there were massive sell-offs in metals and zinc. Vedanta went through an ex-date for its demerger and will be split into five companies. The remaining part of Vedanta Limited traded at minus 65% today, while the other four companies will be listed over time, potentially unlocking value through the sum of parts.
Small gainers in this space included Tata Capital, Chola Finance, Siemens, and Adani Power.
Movers Of The Day
The mover of the day was HFCL, as fourth-quarter profits rebounded and revenues doubled. HFCL was previously beaten down, but healthy order books from defense deals have caused a jump. Syngene International also rose; despite a 19% fall in profits, the stock went up as expectations were likely for a steeper decline.
Sectoral Overview
Sectoral trends showed all sectors down except Nifty IT, which was up 0.37%, and Pharma, which was flat. This indicates a flight toward defensive stocks on a day when metals lost the most at minus 2%. PSU banks, real estate, and FMCG also saw losses. FMCG is unique today because it usually acts as a defensive play, but positions built in Hindustan Unilever ahead of their numbers were hit.
Looking at the past month, all sectors remain reasonably positive, with defense, capital markets, and real estate performing best.
Sector of the Day
Nifty Metal Index
Metals seem to be rolling over with sharp cuts in stocks like National Aluminum, Hindustan Copper, APL Apollo Tubes, and Hindustan Zinc.
U.S. Market
In the US markets, the previous session saw Charter Communications drop 8%. Comcast, Medtronics, GM, and Boeing also lost ground. The Dow Jones and Russell were both down 0.6%, while the Nasdaq remained buoyant, up 0.58%. Over the last 12 months, the Nasdaq has provided whopping returns of 37.4%, the Russell 38%, the S&P 500 27.3%, and the Dow Jones 20%. In the Nasdaq 100, Intel Corporation rose another 12%.
The President continues to tweet about Intel, and the stock continues to rally. The government invested in Intel just three months ago and has already seen significant returns. Nvidia was down 1.84%, while Microsoft, Google, Apple, and Meta were flat. Amazon, Cisco, and AMD moved up.
Tweet Of The Day
Interesting data from the World Gold Council shows that for the first time, Indians are buying more gold for investment than for jewelry. This is a healthy shift that provides stability to demand. Even those who are not financially savvy in India understand that gold can provide a 12% to 13% annual return. It is a cultural wealth preservative.
While gold is not the choice for the fastest growth, it is excellent for conserving wealth for generations. If you haven’t been buying gold, you should consider allocating some toward it.
