We had a good bounce in the market today. The first half of the day was somber, with markets coming off, but then Marketman decided that they should corner the bears for once, and the bulls came ramping up. Short covering also ensued from the bear camp, likely because tomorrow marks the outcome of the US elections. It’s likely that people with large positions didn’t want short positions to carry over into tomorrow morning. That may have been a reason for the bounce in the markets.
This was a relief bounce. We don’t yet know if this is the final bottom of this leg or not, but since yesterday, it seemed like the market wasn’t willing to go down any further immediately. It may chop around for a while or bounce again—let’s wait and see where it goes. We’ve done a data study on the strongest stocks and sectors in the last 12 months, which we will go through in today’s video. This is important because we tend to lose context when we look at the short-term market. Right now, everyone’s mind is very bearish or sulky, but it’s crucial to reset your mindset by considering where we are coming from, even just in the last 12 months—forget about 24 and 48 months for now.
Where is the market headed?
Market Overview
We saw a nice bounce today. You can see that almost after clipping this pivot low yesterday, the market had retraced and today, even after going almost to yesterday’s low, it smartly recovered. Nifty was up 0.91% for the day. It’s hard to say if the worst is over, but it’s definitely a great relief from where we were in the middle of the afternoon, which was pointing more towards 23,300-400, the HNS target from the first head-and-shoulders pattern. This is a strong, strong move.
As I’ve mentioned many times earlier, one should be looking out for at least a two-day high to be broken on a closing basis. So the next session is very important. Let’s see what the US election results have in store for us.
Nifty Next 50
Nifty Next 50 bounced by 0.55%, but it wasn’t that impressive. We are still in this range of consolidation that we’ve been in for a while. It’s just managing to hang in there.
Nifty Mid and Small Cap
Nifty Mid Cap has been within a 300-point range over the last eight or nine sessions, up 0.46%. Small Caps gained 0.48%. Among all the indices, Small Caps are still looking the best, not being anywhere near the July low pivots, unlike Nifty, which has tested and is near those levels. If you compare them, the Nifty chart looks much weaker than the Small Cap chart.
Nifty Bank Overview
Bank Nifty had a smart move today—a complete bullish engulfing pattern with a two-day high broken, closing up 1.94%. The Bank Nifty bulls are likely betting on the possibility of a continuation of the current US regime, which might lead to interest rate cuts. But this could also be a knee-jerk short-covering bounce. Nevertheless, Bank Nifty is showing strong moves whenever it does, indicating that weakness is not really present there. Bank Nifty has consolidated, and a sharp move up is definitely possible from here.
Advanced Declined Ratio Trends
In terms of momentum, the advances outnumbered declines—300 advances to 178 declines, 317 advances in total. There was a nice bias toward the advances. FIIs continued their selling spree, offloading 4,000 crores, while DIIs bought about 3,000 crores on November 4th.
Nifty Heatmap
In today’s heatmap, there were significant gains across various sectors, particularly steel, cement, and banking. HDFC Bank saw a remarkable 5% gain, while SBI was up 2.3%. Both private and PSU banks were leading from the front. Bajaj Auto rose by 3.6%, Tata Motors by 3.6%, JSW Steel by 4.6%, and Tata Steel by 3.6%. The government hinted at upping the import duty on steel, which led to Indian steel manufacturers rejoicing. If Trump wins tomorrow, we could see a lot of tariff barriers and possibly a devaluation of the yuan, which could lead to changes in USD/INR. So there’s a lot of dynamics to consider depending on the election outcome.
On the other hand, stocks like Bharti Airtel and ITC remained in the red. Nifty Next 50 was a mixed bag, with some good gains from PFC, Chola Finance, Adani Power, TVS Motors, Vedanta, and Jindal Steel & Power. However, stocks like Lodha, ABB, NHPC, TVS Lab, PDLite, PBL, and Bajaj Holding lost ground.
Sectoral Overview
Looking at sectoral trends, metals led the markets today, with a 2.8% gain for the day and a 1.8% gain for the week. Private banks, led by HDFC Bank, were up 1.9%, erasing their weekly losses. PSU banks also saw a rise of 1.8%-1.9% for the week. Autos gained 1.1% for both the day and the week. On the flip side, FMCG continued to struggle, down for the day, week, and even over the past three months. The same trend was observed in energy, public sector enterprise stocks, and FMCG. Over the last 12 months, FMCG has been one of the lowest gainers, underperforming compared to other sectors.
Sectors of the Day
Nifty Metal Index
Metals were in a strong uptrend, gaining 3-5% today.
Stock of the Day
Gland Pharma
Stocks like Gland Pharma made a huge move, rising from 1590-1600 to 1832, up 13.78% post its earnings. It’s had a very volatile history—from 4000, it dropped to nearly 900, then shot back to nearly 2200 in the last year and a half. It’s now consolidating and may potentially target its previous highs going forward.
Story of the Day
Now let’s look at the strongest stocks and sectors over the last 12 months. Public sector enterprise stocks have done the best with a 65% gain. Reality stocks gained 51%, pharma was up 50%, and Nifty Auto saw a 46% gain. From a benchmark point of view, Nifty Next 50 did the best at 53%. Metals were up 44%, small caps gained 43%, and oil and gas stocks gained 40-42%. Mid caps gained 39%, while commodities, consumption stocks, PSU banks, and MNCs were up 32-38%. On the lower end, Nifty IT was up 30%, services sector gained 27%, Nifty was up 24%, and financial services were up 21%. Nifty Bank, in particular, underperformed, up just 17.9%, and FMCG only gained 12.5%. Private banking gained 11.1%, and Nvidia actually saw a loss of 13.1%.
This context is important because such performance isn’t repeatable every year or even every few years. When we’ve had 30-50% gains in a year, it means the market has likely jumped ahead of itself. It’s like skipping from point A to point D in one leap, and the next moves will be more tempered. After such huge gains, markets usually go through a period of digestion, where earnings catch up with valuations. It’s also natural for investors to take profits from a market that’s done well and move them to underperforming markets like China, which has struggled recently.
The correction we’ve seen so far is quite moderate. It’s not really a proper correction, but rather just a tempering of liquidity flows. There’s no immediate cause for concern. In terms of stocks, the last year has been terrific, and even if the market comes off a bit, it’s part and parcel of the game.
Within the Nifty 50, some of the top performers include Trent (up 214%), Bharat Electronics (up 100%), Mahindra & Mahindra (up nearly 95%), Bajaj Auto (up 81%), and NTPC (up 70%). On the flip side, some stocks like HUL, Maruti, Tata Consumer, ITC, and Bajaj Finsav had minimal gains.
Among the Nifty Next 50, Hindustan Aeronautics was up 118%, while stocks like IRFC, Zomato, Siemens, and Madras Sumi also performed well. Many of the stocks in our strategies were among the top performers in both the Nifty 50 and Nifty Junior. Even the bottom performers were not significantly negative, with most being flat or slightly positive.
In mid-caps, stocks like Kochi Shipyard (up 200%), ABB Power (up 214%), and RVNL (up 188%) had great runs. Even in small caps, stocks like Inox (up 200%) and Motilal (up 175%) saw significant gains. The bottom performers here were also flat, indicating that overall, the market has had broad-based gains.
Given this context, it’s important to focus on the pockets of strength in the market, as these are where the opportunities lie. Many investors are watching the broader indices and feeling gloomy, but remember that the last year has been terrific. Markets will go up, come down a little, then go up again. There will be phases of digesting the gains, removing excesses, and shifting ownership. It’s a continuous process.
As in our scriptures, we can think of it as Manthan—a churning process where excesses are phased out, and the strongest stocks rise to the top. The key is to be patient, as bear markets can still have strong-performing stocks. So, focus on selecting stronger stocks and be prepared to exit weaker ones.
