AI Bubble, Bitcoin Crash & Bihar Boom — What’s Next?

Markets Overview

The week was packed with surprises, both political and market-driven. The most unexpected development came from Bihar, where the NDA government scored a decisive and unexpected victory. Even seasoned political experts hadn’t forecast such a landslide, and the result injected a fresh wave of confidence into the markets. Political stability — especially when it extends across key states — has a direct correlation with investor sentiment, as it reinforces policy continuity and economic predictability. While markets had partially priced in a favorable outcome, the scale of this win was a genuine surprise. It serves as a reminder that markets, like politics, are driven more by outcomes than projections — and no matter how sophisticated our predictions are, uncertainty remains the only constant. This week’s events subtly underscored the timeless truth that following the trend is often wiser than trying to outguess randomness.

Across the globe, the U.S. markets appeared uneasy. “The Big Short” legend, Michael Burry, made headlines again — this time shorting major AI stocks, including large positions against the mega-cap “Magnificent Seven.” His decision to return external capital and take his fund private spooked global investors, prompting fresh questions about stretched tech valuations. Nvidia’s market cap, now hovering around $5 trillion, is almost equal to India’s entire market capitalization — a staggering comparison that captures both the dominance and potential fragility of the AI trade. Meanwhile, Bitcoin crashed from $125,000 to around $95,000, extending the tremors from digital assets to risk sentiment more broadly. When such corrections hit one corner of the global asset universe, investors instinctively move to preserve capital — often trimming exposure elsewhere. Short-term pain in one asset class, however, frequently seeds opportunity in another. As money exits overheated assets, it eventually seeks relative safety and better valuations elsewhere — potentially flowing toward emerging markets like India.

For now, India remains resilient. Despite global jitters and lingering tariff concerns over the last quarter, domestic markets have not cracked under pressure. Earnings season has passed without major shocks, and the fundamental tone remains constructive. Over time, as capital rotates out of expensive U.S. and crypto assets, India and other emerging markets could be key beneficiaries. The near-term, though, depends on global stability — any easing of fear, coupled with the absence of fresh bad news, could trigger another strong leg higher in Indian equities.

On the daily chart, the Nifty looks strong and well-supported. Prices remain comfortably above both the 20-DMA and 100-DMA — a healthy technical alignment suggesting the uptrend is intact. The index sits only a stone’s throw from its all-time high, signaling strength beneath the surface.

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The big news is the clean sweep that the NDA achieved in the Bihar elections, an outcome that I think surprised most people, perhaps even the party itself.

The lesson we can take away from this is that what we expect may not actually happen. This is proven repeatedly, whether it’s in markets or, in this case, elections: the masses and the markets have a mind of their own that all analysis often fails to capture. Therefore, when thinking about stocks, sectors, or the market, it’s essential to remember the “Bhaav Bhagwan Che” (Price is God) principle—the BBC principle—which proves that all predictions and analyses can fall flat; the real thing is where the trend, or Bhaav, is actually moving.

The markets were volatile today. We saw a “sell on news” event this morning, where the markets tried to drop below the previous two-day low. However, there was a strong recovery towards the end of the day, indicating that the markets are in fine shape from that perspective.

Rebalance Update for the week