Where is the market headed?
After five weeks since the war began, a ceasefire has been announced. Reports from last night indicate that Iran has presented ten points for negotiation, and the US has stated they will stop for two weeks. In our view, this signifies the end of the war, particularly regarding US involvement. While Israel and Iran will likely continue to face regional issues, it appears the US was searching for an off-ramp to exit the conflict, and they have found it. The US does not require Middle East oil and certainly does not need the heavy expenses this war has imposed. We believe they will leave the region alone for some time, potentially ending the global turmoil that this conflict started.
Global markets are already rejoicing, starting with Japan this morning. While some might say it isn’t over until it is truly over, the market reaction is telling. We have seen a gain of almost 10% from the bottom in just three sessions, making up more than half of the losses incurred since the war started. It does not seem like the markets are going to hold back anymore; they are likely to limp back to their original positions.
The narrative will now immediately shift toward local issues, specifically sputtering growth. In its meeting today, the RBI downgraded the growth potential for FY27 to 6.7%. As the war moves behind us, the market will focus on these domestic factors.
Market Overview
The Nifty leaped up by 3.78% today with a huge gap up. We may continue to climb or consolidate before another move up, which will be revealed in the coming days. It is remarkable to note that while it took five weeks to come down, the market has recovered 50% of that ground in just three sessions.
For those who were sitting on the sidelines thinking they would wait to get back in, there was no chance to enter early today as the market opened higher and stayed there. The key question for market timers is whether to enter now or wait for a dip to fill the gap. However, another gap tomorrow could leave those investors completely out of turn. This is why we never try to time the market. It is essential to stay invested in stocks that are churning for strength.
Nifty Next 50
Broad market performance was strong across the board. Nifty Junior rose 4.74%, representing a nice jump of almost 10% from its bottom.
Nifty Mid and Small Cap
Mid-caps were up 3.97%, and small-caps rose 3.9%, with short and mid-term trends turning positive for the latter.
Bank Nifty
The Nifty Bank saw a big leap of 5.67% despite the RBI not cutting rates. While a rate cut was a hope for the market and could have provided more aggressive confidence, there are likely valid reasons for holding off, including persistent inflation fears and the fact that the war hasn’t officially ended.
GOLD
Gold gave up some of its morning gains to trade 1.5% from the previous session.
Crude Oil
While oil prices plummeted. We noted the start of this fall yesterday afternoon, and today saw a massive 9% gap down for crude oil.
Advance Decline Ratio
Market trends showed a flat advanced decline line, meaning stocks opened and held their levels throughout the day with almost no change. There were 463 advances and 236 declines.
Heat Maps
Virtually everything was green except for stocks that previously benefited from high oil prices. Major movers included L&T jumping 7.5%, Maruti up 6%, HDFC Bank up 5.7%, and Reliance up 3.3%. Axis and Kotak Bank also saw gains. Notably, the stocks that were down the most jumped the highest today.
This is a normalization phase, and these stocks won’t necessarily lead the rally indefinitely. Today was a knee-jerk reaction where institutional players bought Nifty and Nifty Next stocks heavily to regain positions.
Other significant performers included DLF up 7%, Union Bank and Muthoot both up 8%, Chola up 9%, and TVS Motors up 6%. While stocks like Torrent Pharma and Dmart took a break, tourism stocks performed well. Metals and commodities also continued their strength, suggesting they will be a sector that moves forward strongly.
Movers Of The Day
The mover of the day was EaseMyTrip, which surged 17.4% following an MoU with Delhi PWD to improve urban infrastructure. While the stock moved from 6 to 8 rupees, it is a small jump considering it previously fell from 50 or 60 rupees.
Adani Green rose 11.2% after a US district court granted a request for a pre-motion conference.
Sectoral Overview
Sectoral charts were entirely green with the exception of Central PSUs, weighed down by ONGC and other large caps. Real estate rose 6.7% and autos 6.69%, two sectors that had been previously beaten down. Capital markets rose 5.73%, with the BSE clocking a new all-time high. Banking, private banks, and financial services all gained 5% or more. This is a pivotal change from the last month.
Capital markets have emerged as the best-performing sector, up 5.8% net. Other sectors like Lodha, Prestige, and Phoenix in the reality index are also turning upward. In the auto sector, Ashok Leyland, Motherson, Tata Motors, Eicher, and Bosch moved up between 7% and 12% in a single session.
Sector of the Day
Nifty Realty Index
Nifty Auto Index
U.S. Market
While the previous US session was mixed—as it occurred before the ceasefire announcement—today is expected to be buoyant. UnitedHealth was up 9%, CVS 6.7%, and tech giants like Broadcom, Intel, and Alphabet did well. The Dow Jones was down 0.2% while the Russell 2000 was up 0.15%.
Tweet Of The Day
Finally, we want to highlight a chart from a tweet we made yesterday regarding oil. Prices often move before news hits the market. Insiders likely knew a deal was coming yesterday afternoon, as oil started dropping before collapsing from $110 to nearly $94. Always look for price movements to precede the news.
