Where is the market headed?
While there has been no let up in the global conflict, markets were sighing a day of relief today. There was a relief rally in most parts of the market. In looking at what happened today, it is important to first consider a tweet regarding recency bias. Looking at a Nifty chart of the last couple of years, it is clear that while a lot of people are panicking right now at 24,500 odd levels, the recency bias that kicks into our brains does not let us think that just in April of 2025, not more than 10 months ago, the market was at 21,700 when the US tariff tantrum had started.
Now the market is at 24,500, which is way higher than where it was 10 months back. This perspective does not take away the current potential of damage from here, but because of recency bias, there is a feeling that the market should not be falling or should not fall more than a certain level. When taking a larger picture, the fall, at least in indices, is not of any great amplitude right now. It is vital to have that perspective in mind because if things really go from bad to worse, a lot more damage is possible to happen, although nobody is wishing for that.
Market Overview
Reviewing the market charts, there was a 1.1% gain in Nifty. A good thing about the last three days is that the market is trying to recover each day from wherever it starts, which is a positive silver lining. A two day high would be a target for a close; if the market closes tomorrow above the high point of today’s close, perhaps some of the sting has been taken off. However, the structure is badly damaged and will require consolidation before any move up can be considered. In any case, the conflict is nowhere near an end.
Every day there is talk about possible negotiations, but then more damage is heard of every day. As long as oil remains contained at 84 dollars, the market may consolidate at some point, but if oil starts to spike up, there will be fresh troubles. Momentum trends remain negative despite the bounce in the markets.
Nifty Next 50
Nifty Junior saw a 1.3% increase, mid caps were up 1.5%, and small caps rose 1.4%.
Nifty Mid and Small Cap
Bank Nifty
This was a decent bounce, while Nifty Bank was the least buoyant at 0.51% for the day.
GOLD
Gold remained flat at minus 0.17% and silver was also flattish at 0.22%.
SILVER
Advance Decline Ratio
The advance-decline ratio jumped up very nicely toward the end with 378 advances to 121 declines.
Heat Maps
Reliance was leading the market from the front, with L&T up 4%. NTPC, Hindalco, Mahindra, and Shriram Finance all performed well. Conversely, Adani Ports, ICICI Bank, and HCL Tech still lost ground today.
In the Nifty Next 50 heat map, good gains were visible across the board with stocks like DLF, PFC, REC, Havells, and Mazagon Dock.
Movers Of The Day
In the mover of the day segment, LT Foods moved up 17% on some institutional interest. Mazagon Dock also moved up 9% following the announcement of a defense deal
Sectoral Overview
Regarding sectoral trends, only Nifty IT continued its downfall, dropping 0.6% to hit multi-month lows. On the higher side, capital markets, defense, public sector enterprise stocks, metals, infrastructure, and commodities were all up 2% or more, representing a good comeback for several of these sectors. Looking at the weekly chart, almost all sectors are still bleeding quite badly, with only defense being up 0.98%.
Sector of the Day
Nifty Capital Market Index
Specifically, capital market stocks like BSC, Computer Age Management, Nuvama, CDSL, and MCX were running.
Nifty India Defence Index
In the defense sector, Mazagon Dock, Data Patterns, Garden Reach, Cochin Shipyard, and Astra Microwave did really well, making defense one of the better-looking charts.
U.S. Market
In terms of chart formations in the US markets, there was a bounce during the previous session as well. AMD, Intel, Palantir, Amazon, and Comcast all went up between 3.5% and 5.5%. Indices went up 0.5% to 1.5% and the market was looking good. Several of these markets, including the US and Israel, are at or near all-time highs. Some markets are benefiting a lot out of this war while other markets that are more oil-dependent are getting beaten down. Micron, AMD, Intel, ASML, Palantir, Tesla, and Amazon were all doing really well. Even markets like South Korea, which were dramatically down in the last two days, staged a 10% recovery today, erasing most of yesterday’s losses.
Tweet Of The Day
In the tweet of the day segment, the IT index is now below 30,000. It was at 46,000 at the beginning of last year and is quietly but surely making a down move. The prospects look quite bleak as of now, with no support in view on this chart. This is typically what happens when a larger trend starts. In the initial phases, one feels the trend will turn back, even at a 10%, 15%, or 20% drop.
In later stages, a person gets blinded by the headlights and feels unable to react. Much later, people may start to say there is no point in selling after losing 70% or 80%. This is how indecision creeps in when there is no plan of action, and that is exactly what is being seen in IT stocks right now.
