New Highs, Weak Breadth - Markets two faced ??

Markets Overview

The week and the month have both come to an end — and what a month it’s been. Several developments shaped the market mood, the biggest being India’s Q2 GDP data, which came in better than expected. The headline numbers gave markets some comfort, signaling that growth remains strong. However, a closer look reveals that nominal GDP growth is still low, largely because inflation has cooled. That’s a double-edged sword: while low inflation helps consumers, it caps nominal growth, and in turn, corporate revenue growth. Many analysts argue that until nominal GDP accelerates, markets struggle to sustain rallies, since pricing power remains weak. The bright side, though, is that low inflation gives the RBI room to cut rates sharply, perhaps as early as December. If that happens, it could be the next big liquidity trigger.

The broader market setup still shows polarization — a theme we’re seeing not only in India but globally. The Nifty 50 has managed to make a new high this week, but the breadth underneath remains thin. It’s a market of “haves” and “have-nots.” The same dynamic is visible in the U.S., where the Russell 2000 (broader index) lags far behind the S&P 500 and NASDAQ, both of which are hovering near all-time highs. This widening divergence means that while the index looks healthy, many individual stocks aren’t participating. It’s a reminder of how essential it is to focus on strength — avoiding laggards and aligning with sectors that are currently in momentum.

Looking at the daily Nifty chart, the week had one strong, decisive session midweek surrounded by four sluggish ones. Still, that one move was enough to push the Nifty to a fresh weekly close, ending up 0.5% for the week.

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The key action today wasn’t in the equity markets, which had a relatively dull session, but in precious metals, which were booming. Silver is truly on fire, hitting new all-time highs in the Comex, Shanghai, and Indian rupee markets, exceeding ₹1,64,000 per kilogram. Gold is also nearing its previous all-time high, up 0.37% to ₹12,703 per gram, climbing close to its earlier peak of ₹13,000 or ₹13,100. This surge is setting the stage for the upcoming Fed meet in December, where markets widely anticipate rate cuts.

Rebalance Update for the week