Never Trust a Promoter's Promise

The day began on a tense note after President Trump made a surprise announcement — a fresh 25% tariff on India. But then came a sudden and strong reversal in the second half of the trading day. There was massive short covering — traders who had bet against the market rushed to cover their positions.

Adding to the recovery was a positive global update: news of an upcoming meeting between President Trump and President Putin, which raised hopes of easing tensions. Global markets responded positively to this, and gold prices — which had jumped earlier — fell again.

• The key level of 24,500 was broken but reclaimed quickly, and the market closed just slightly up by 0.09%, with a day’s low of 24,344, showing a 250-point recovery.

• The Nifty Next 50 recovered 0.24%, Midcaps rose 0.26%, and Smallcaps were just slightly down by 0.1%.

• Nifty Bank also gained 0.2%, showing a similar recovery trend.

• Meanwhile, Gold prices, which touched high levels during the day, fell and closed around ₹10,090 per gram, still a strong level.

Other Market Triggers

• A special mention goes to BHEL, which has been falling sharply. It dropped from ₹252 to ₹222 in just two sessions and has been under pressure since July. Despite some recovery today, the Q1 losses were worse than expected.

• Similarly, BPCL also saw a sharp decline due to lower tariffs on Russian oil.

What to watch next ?

• Several important visits are expected in the last week of August: our Prime Minister will travel to China, President Putin will visit India, and a U.S. negotiation team is expected to arrive as well.

• News of an upcoming meeting between President Trump and President Putin raises hopes of easing tensions.

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What To Read This Week ?

A History Lesson: The MicroStrategy Story ⏳

Today, we're taking a trip back in time to revisit the history of MicroStrategy, a company many of you know as the "brand ambassador" for Bitcoin, thanks to its promoter, Michael Saylor. While the company's current business model is to borrow money to buy Bitcoin, we need to rewind the clock to a very different time: March 20, 2000.

Back then, the stock was trading at a high of around $320-$330. What happened next is a cautionary tale for investors everywhere. Within a week, the stock plummeted to $60, and within a month, it had dropped to a mere $23.

That's a 61% drop in a single day, and a staggering 99% drop over the course of a year!

The Catalyst: Restating Financial Results 📉

What caused this dramatic collapse? The promoter, at the time, announced that the company needed to restate its financial results. This admission was a shockwave to the market. The accounting practices they had been using were deemed unsuitable, and the numbers that had supported the stock's meteoric rise were revealed to be unsustainable. This event serves as a powerful reminder of how quickly investor confidence can evaporate when the foundation of a company's financial reporting is called into question.

The Peril of "Leap of Faith" Investing 🙅‍♀️

This brings us to a timeless piece of advice: Never take what management says as gospel truth.

As investors, it's easy to fall into the trap of believing that the information we read in annual reports or hear in management commentaries is completely objective and in our best interest. However, in the real world, management often tells shareholders what they want to hear, not necessarily the whole truth. There is often a conflict of interest at play. That's why it's crucial to take a "bag of salt" and apply a healthy dose of skepticism to any commentary you receive.

Takeaway? Always prioritize what you can observe (the company's financial statements, stock charts, etc.) over what you hear from management. It's a timeless investing principle that protects you from making decisions based on promises rather than performance.