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Market Update - Wednesday, 1 July

The Nifty ended the day up 0.59%, putting the index back at the 24,000 mark. It feels like the market has crossed 24,000 a zillion times in the last three months. The silver lining to the confusion still going on across many fronts is that the market is not falling.

Oil has stabilized, so there is no pressure from that front anymore. The US-India deal is yet to be closed, which leaves some uncertainty, but other than that, it is pretty much business as usual for the market now.

Other Market Triggers

• The banking space is probably getting a tailwind from recent mergers and acquisitions action, as Kotak is acquiring the retail business of Deutsche Bank. Whenever that kind of action happens, the industry sorts of starts to jog. Axis Bank, Kotak Bank, and even State Bank of India all did well today.

• Meanwhile, the FMCG sector, which was completely down in the dumps, suddenly woke up today. Stocks like ITC, Hindustan Unilever, and Nestle all did all right.

• Autos also performed all right. On the weaker side, the steel sector is looking softer than before and was smashed down again, with those stocks losing 2 to 3%.

• The IT heavyweights also struggled, with TCS, Infosys, HCL Tech, and Tech Mahindra all ending the day down.

• However, Reliance supported the markets, and Adani stocks came back with a few percentage gains on each of them.

• The Nifty Next 50 heatmap looked similar to the main index. Capital goods and some defense stocks were up, Adani stocks gained, and FMCG did all right. DLF made a big move of 4.6% after a long time.

U.S. Market Updates

Reviewing the previous session of the US markets, equities were all up. The Nasdaq climbed 1.68% again, and the S&P 500 rose 0.8%.

Have questions about our U.S. Strategy? Email us at [email protected]

What to watch next ?

• There is some concern about a liquidity crisis in the markets given a new regulation being enforced on prop traders and others starting from the 1st of July.

• Some people are of the opinion that liquidity in the market could go down reasonably big because of this.

• Some recent analysis on IT stocks shows that people are beginning to justify holding them by saying that at least these companies have real estate. However, an investor should never deviate from their core thesis.

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Strategy Of The Day

What To Read This Week ?

Gold's Recent Correction: A Buying Opportunity or a Warning Sign?

The gold market has experienced a notable shift recently, with prices cooling down by roughly 20% to 25% from their recent peaks (depending on whether you track it in USD or INR). A revised import duty structure in India has also created a slight valuation gap between global and domestic markets.

However, before anyone panics, it is essential to look at the macro picture. The long-term engine driving gold remains intact, powered by three major global giants: India, China, and Global Central Banks.

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The Demand Triad: Who is Buying and Who is Sitting Out?

To understand where gold is headed, we need to look at how its three largest consumers are behaving right now:

• India (The Sudden Dip): Interestingly, Indian retail consumption has seen a temporary decline. Domestic policies and leadership appeals urging citizens to alter their traditional gold-buying habits have actually had a measurable impact, visibly cooling down local demand and affecting global price momentum.

• China (The Steady Accumulator): Unlike India, China’s appetite for gold remains highly stable. They are continuing their purchases at their historically steady, predictable annual pace.

• Central Banks (The Record-Breaking Bulls): This is where the real excitement lies. Central banks around the world are hoarding gold at historic levels.

The Central Bank Survey Insight: > In a recent global survey asking central banks if they plan to increase their gold reserves over the next 12 months, a record-high percentage answered with a resounding YES. Furthermore, 89% of these central banks expect global gold reserves to hit historic highs within the year (the second-highest reading ever, just behind 2025's staggering 95%).

From a Relentless Run to Healthy Stability

Gold has been on an absolute tear over the last few years. We watched it skyrocket from the ₹40,000 - ₹50,000 range all the way to a breath-taking peak of ₹1,80,000.

Currently, the price is undergoing a healthy correction, stabilizing around the ₹1,40,000 to ₹1,50,000 mark. This cooling-off period shouldn't be feared; instead, it should be viewed as the market building a strong, sustainable base. If gold spends some time consolidating here, it sets up a powerful launching pad for next year's growth.

The 25-Year Compounder: Outperforming Equities?

Long-term gold investors have absolutely zero reasons to complain. If you look at the Compound Annual Growth Rate (CAGR) of gold over the past 20 to 25 years, it sits at a incredibly healthy ~15%.

To put that into perspective, a 15% consistent return matches, and in many cases, beats, the returns generated by the equity markets over similar extended periods, but with significantly less sleepless volatility. Gold isn't just a dead asset; it’s a proven wealth compounder.

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Meme Of The Day