Why Markets Don't Crash Like They Used To

Market Update - Wednesday, 18 Feb

The markets currently remain flat with no runaway rallies, yet there is a sense of stability. An improving undercurrent is visible as broad-based gains begin to settle in. While frontline stocks are not moving up significantly, the mid-cap, small-cap, and micro-cap ranges are consolidating and appear to have stopped falling.

A notable discussion point today stems from a tweet by The Gladiator, quoting popular macroeconomist Luke Grohman. Grohman predicts that gold could reach 25,000 dollars in the next five to ten years.

The market has been up for the third consecutive day. Three days ago, the Nifty showed a very nice bullish engulfing candle, followed by a promising two-day high close yesterday. Today, the market closed even higher. Although prices haven't moved extensively since the U.S. deal announcement, the negativity has been absorbed. As long as the market stays above 25313, the current range is secure; fireworks are expected if we break above 26000.

• The Nifty Junior is approaching recent highs and displaying a cup and handle formation that could lead to a breakout, closing up 0.67%.

• Mid-caps rose 0.55% for their third straight day of gains, while small caps rose 0.5% despite trailing previous highs due to their earlier aggressive moves.

• The Nifty Bank hit another all-time high close, up 0.62%, signaling a market set for a higher rally.

• Gold remains stable with a 0.9% gain today, priced at 15199 per gram.

• Silver recovered yesterday’s losses with a 3.44% jump.

Other Market Triggers

• The Nifty heat map shows widespread green, with the exception of IT and some energy stocks.

• Reliance performed well at 1.2%, alongside gains in Axis Bank, Bajaj Finance, HDFC Life, ITC, and Mahindra and Mahindra.

• Conversely, TCS, Infosys, HCL Tech, and Wipro were down.

• In the Nifty Next 50, Adani Green, LTIM, Torrent Pharma, and Pidilite saw declines, while CG Power, Vedanta, IOC, BPCL, Divi's Lab, ICICI GI, and REC posted gains.

• In the "Mover of the Day" segment, Godfrey Phillips moved up dramatically by 19.94%, shaking off earlier concerns regarding higher cigarette taxation. The stock formed an inverse head and shoulders pattern and met its target today. ITC also gained on expectations of potential price hikes.

U.S. Market Updates

• In the U.S., where markets were closed Monday, Tuesday’s trade saw the NASDAQ fall as stocks like Mondelez, Oracle, Walmart, and Medtronic dropped 3% to 5%.

• While the NASDAQ was down, the Dow and S&P 500 were up. Apple saw a resurgence, up 3%, and Nvidia and Avgo also gained, while Google, Microsoft, and Tesla declined.

What to watch next ?

• While equity remains a great asset class, there are compelling reasons to allocate to gold now. The global economic regime is shifting away from the last 50 years of free-flowing dollars and consistently reducing interest rates.

• We are entering a phase where global central bankers are less accepting of dollar reserves and interest rates are struggling to trend downward. Even with the U.S. administration repeatedly expressing a desire to cut rates, the long end of the U.S. yield curve is not coming off.

• Gold provides a necessary transition through this changing global landscape, and these data points should provide the confidence needed to maintain a portion of your allocation in the metal.

Read Full Article

Important Announcement

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 Death of Volatility? Why Markets Don't Crash Like They Used To

If you feel like the markets have become "boring" lately, you might actually be onto something. While retail sentiment often feels chaotic, the hard data tells a different story: the era of bone-crushing market drawdowns (outside of global catastrophes) might be behind us.

The "Peaceful" Decade: A Shift in Market DNA

Looking at historical data—specifically recent insights from DSP—there is a stark contrast between the markets of the 80s, 90s, and early 2000s versus today. Up until 2016, the market was prone to violent, jagged movements. However, over the last 10 years, we have entered a phase of remarkable "calm."

Aside from the 2020 COVID-19 crash—which was a global black swan event beyond anyone's control—the market has become surprisingly resilient. We simply aren't seeing the 30-50% erosions that used to be commonplace.

The 20% Floor: Maturity in Action

Statistically, we haven't seen a sustained drawdown exceeding 20% in nearly a decade (again, excluding the COVID blip). Even when we hit a rough patch around 2015-16, the recovery was swift, happening within a single year.

How today compares to the "Volatile Era":

Why Markets Don't Fall Anymore

This isn't just luck; it’s Market Maturity. We are seeing a structural shift where the market is no longer allowed to freefall in a "normal" course of business. Increased domestic liquidity (SIPs), better regulation, and institutional stability act as a safety net. While a 10-15% correction happens occasionally, the "system" now absorbs the shock and bounces back within months.

Read Full Article

Meme Of The Day