A 45-Year U.S. Market Cap Shift

Market Update - Thursday, 11 Dec

The market saw a small bounce today, which occurred post the Federal Reserve rate cut meeting. The general sentiment across Asian markets was mixed, with indices both up and down.

A key factor influencing the domestic market is the continued weakening of the currency, with the USD INR hitting a new high of 90.37 against the US dollar, which means the rupee has depreciated to a new low.

• Market indices showed a strong rebound, with the Nifty up 0.55% and Nifty Junior gaining 0.50%, placing the Nifty Junior very near the 25,900 level again.

• Mid caps saw a good bounce of 0.85%, though a move above 22,000 is needed for a decisively positive outlook.

• Small caps gained 0.58%, bringing a sense of stability after a few difficult days.

• The Nifty Bank index moved up 0.42%, staying within its recent range for the third consecutive day without a decisive move, but managing to hold its ground.

• In the precious metals space, Gold has moved up and is now near 13,000 per gram, with the metal likely to break out into a new high, following silver’s lead.

• Silver continues to make newer and newer highs, now priced at 1,91,500 per kilo. This is a huge and ferocious run, climbing from 1,50,000 in the third week of November to 1,91,000 in the second week of December.

• This rapid surge in silver is likely a reflection of a short silver market in terms of delivery and how far silver prices had lagged behind other asset classes like gold and equities.

Other Market Triggers

• The Nifty heatmap was mostly green, with Jio, Kotak Bank, Zomato, Tata Steel, and Adani Enterprise leading the gains.

• There were some losses in stocks like Bharti Airtel and Asian Paints.

• The Nifty Next 50 heatmap was also predominantly positive, with minor losses in IOC, BPCL, Chola Finance, Enrin, and Bajaj Holding.

• Good gains were observed in Hindustan Zinc, Vedanta, Divi's Lab, Adani Green, Motherson Sumi Systems, and Bosch.

• In the mover of the day segment, Ola Electric moved up 6.76%. This jump occurred despite the S&P downgrade of the promoter ANI Technologies, possibly indicating a dead cat bounce, a pattern observed many times in the past for this stock, which has disappointed many investors.

U.S. Market Update

• The previous session in the US markets saw good gains, which were solidified post the Fed rate cut.

• The S&P was up 0.6%, Dow Jones gained 1.1%, and Russell 2000 rose 1.3%.

• Several stocks performed well, including American International, GM, Charter Communications, Nike, and US Bancorp, all up nearly 4% to 6% in the markets. A reminder is necessary that some of these stocks could be part of a US stock strategy, but these are certainly not recommendations.

What to watch next ?

• A depreciating currency puts upward pressure on stock markets as they must price in the loss of currency value. While this provided a relief day after the severe battering in previous sessions, the movement in the currency is concerning.

• The rise in the USD INR, particularly after the US rate cut, is a point of worry. Typically, a US rate cut would lead market participants to expect capital flow from US dollars toward emerging market currencies like the rupee.

• The fact that the dollar-rupee pair has made a new high post-rate cut suggests there could be further depreciation of the rupee.

Read Full Article

We are now live on our official WhatsApp Channel. We share all our strategy updates, rebalances, and important announcements here. Please watch this video to know more & join in at the earliest possible.

Join Now

Top Trending Strategies

What To Read This Week ?

📰 The Market Metamorphosis: A 45-Year U.S. Market Cap Shift (1980–2025)

The only constant in life is change. We operate in an "Adapt or Perish" environment, meaning successful market participation requires continuous evolution. This newsletter analyzes a dramatic shift in U.S. S&P 500 Market Capitalization distribution over 45 years, from 1980 to 2025.

📉 The Changing Face of S&P 500 Market Cap

The data reveals a seismic change in which sectors dominate the S&P 500 market value. The traditional titans have been dethroned by companies focusing on innovation.

🏭 The Decline of Manufacturing Dominance

In 1980, the Manufacturing sector held a commanding 66% of the S&P 500's market capitalization. This was the era of industrial giants. Fast forward to 2025, and this share has plummeted to a mere 17%.

• 1980: Manufacturing was the undisputed market leader, reflecting a heavily industrial U.S. economy.

• 2025: The sector's relative importance in terms of market valuation has drastically reduced, even though production remains vital.

Holding onto old manufacturing behemoths like General Electric or Boeing without adapting to the new market dynamics would have severely hampered portfolio growth.

💡 The Rise of Innovation and Technology

The most significant change is the ascension of Innovation-led Companies (Tech, Communication Services, and Healthcare).

• 1980: Innovation companies represented only 14% of the market cap.

• 2025: This sector now commands 49% (nearly half) of the S&P 500 market cap.

This explosive growth over the last few decades clearly indicates that the market is placing the highest value on companies that leverage technology, drive disruption, and capitalize on AI and other advanced technologies. All portfolio growth in the last 10-20 years has largely been concentrated in these areas.

⚖️ Consumer and Financials Find a New Balance

While Manufacturing collapsed, the Consumer sector has remained relatively stable, seeing a slight uptick from 15% to 17%, maintaining a consistent double-digit presence.

Meanwhile, the Financials sector (which includes REITs) has grown significantly, moving from a marginal 5% in 1980 to a substantial 17% share in 2025. This reflects the increasing sophistication and importance of the financial industry in the modern economy.

Read Full Article

Meme Of The Day