Weekend Investing Daily Byte - December 20

How are the Markets Looking ?

On December 20th, the markets experienced a significant swing, dropping nearly 500 points after reaching a new high earlier in the day. This correction, while sudden and steep, shouldn’t come as a surprise to those who understand the nature of market fluctuations. It’s important to remember that ups and downs are an integral part of investing.

From a broader perspective, we lost four days of gains on the Nifty index. While this correction may signal an intermediate top in the market, it is also possible that we may witness a U-shaped or V-shaped recovery in the coming weeks. However, it’s worth noting that several sectors have shown signs of damage, suggesting a potential cool-off period in the near future.

Nifty Heatmap

Taking a closer look at the sector performance during this market swing, we can observe that almost every sector experienced a decline.

The Nifty heat map was dominated by red, indicating the widespread nature of the downturn. However, a few sectors managed to fare relatively better.

HDFC Bank and Hindustan Levers were the only sectors that avoided significant losses. On the other hand, Reliance, Tata Motors, Mahindra, Adani, Adani Ports, Adani Enterprises, L&T, Tata Steel, Coal India, Infosys, TCS, SBI, and several other major stocks recorded substantial declines ranging from 1.5% to 6%. ONGC and Tata Motors were the only ones spared.

Sectoral Overview

The worst-hit sectors during this market swing were PSU (Public Sector Undertaking) banks and metals. PSU banks saw a massive decline of around 4%, while metal stocks suffered losses of 3.8%. Additionally, commodities, energy, and real estate sectors were also down by more than 2 to 3%.

While almost every sector experienced a decline, the FMCG (Fast-Moving Consumer Goods) sector showed some resilience, with only a slight decrease of 0.3%. Bank Nifty performed comparatively better than other sectors, with a decline of 0.9%.

It’s crucial to note that market swings like these are not uncommon and should not be a cause for excessive worry. Temporary setbacks and corrections are part of the journey as an investor.

Mid & Small Cap Performance

Moving beyond the benchmark indices, let’s take a look at the performance of mid-cap and small-cap stocks during this market swing. Mid-cap stocks experienced a more stringent decline, dropping from a high of 46,000 to 43,919, wiping out nearly eight or nine sessions of gains.

Similarly, small-cap stocks suffered a significant blow, with almost twelve days of gains being erased in a single day. The volatility in small and mid-cap stocks tends to be more pronounced, often resulting in larger swings and faster wipeouts of previous gains.

The short-term trend in these categories has turned negative, but it’s important to keep in mind that medium and long-term trends remain intact. Investors should focus on their long-term investment goals and exercise caution during periods of heightened volatility.

Bank Nifty Overview

Nifty bank has come down and covered this gap that was there four days back again, back to this consolidation zone.So no major damage but yes, about 1000 points lost since the top.

Highlights – PSU

PSU has a huge bearish candle of about six days of candles getting engulfed by this one single candle. So there. While details will come out later, but it does seem like some foreign funds or some institutions have sold off big today’s market. We’ll wait and see, because the major damage has happened in public sector enterprise stocks and in PSU banks so there is some funds that have really slammed hard on these stocks today.