Will the Pain Continue in the Markets?

Market Update - Wednesday, 8 July

The global geopolitical landscape has taken a sharp turn for the worse, effectively bringing diplomatic progress back to square one. Recent events in the Strait of Hormuz, where….(Watch FULL VIDEO)

The Nifty index formed a large downward candle, closing 2.12% lower for the day. This steep drop has opened up gates for further downward movement, leaving the market staring at two open gaps just below current levels.

Other Market Triggers

• A glance at the Nifty heat map revealed a completely red screen with absolutely no green visible.

• Key sectors including automobiles, fast-moving consumer goods, information technology, banking, space, and oil and gas were completely spared from the selling pressure.

• The Nifty Next 50 heat map mirrored this disappointing trend. It is frustrating to witness this sudden pause, especially since market structures and formations were looking highly constructive just prior to this news.

• Despite the heavy selling, a few isolated stocks managed to find buyers and land on the top gainers list.

U.S. Market Updates

This weakness followed a lackluster previous session in the US markets. The Nasdaq led the decline across the Atlantic, dropping 1.7%, while the Russell 2000 fell nearly 1.0%. The Dow Jones and S&P 500 remained relatively flattish, losing about half a percent.

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What to watch next ?

• The downward pressure is visible across international markets, with Asian markets, particularly South Korea, leading this specific segment down, and US stocks following suit.

• Traditional safe havens are not behaving as expected; as stocks fall, gold is also declining, and bond yields are moving up. The interest rate monster has reawakened.

• To cool down these rising yields, global markets may require a significant liquidity push or massive government stimulus packages. However, it remains highly uncertain how effective such measures can be if the war persists, especially since global oil supplies and inventories are running exceptionally low.

• In the United States, the Strategic Petroleum Reserve has already been drained to a 40-year low, creating a very tricky macroeconomic dilemma. While there is a slight chance this conflict is a temporary negotiation tactic that will normalize in a few days, the reality is that constant uncertainty on a weekly basis has become the new normal that market participants must learn to live with.

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Strategy Of The Day

What To Read This Week ?

The Momentum Manifesto: Cracking the Factor Investing Code

Whether you are a seasoned investor or just starting out, you have likely run into the great debate: Which investing style actually builds the most wealth? Is it the hunt for undervalued bargains (Value), backing high-flying winners (Momentum), or sticking to rock-solid balance sheets (Quality)?

A definitive study by Edelweiss Mutual Fund (utilizing ACE Mutual Fund data as of March 31st) has put these styles to the test. By analyzing the top 250 stocks and applying a strict 3-month rebalancing rule, the data reveals a clear, undeniable champion.

Here is how the major investment factors stack up when put under the microscope.

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The 10-Year CAGR Face-Off

While every single factor made money over the last decade, the gap between the top performer and the rest of the pack is staggering. If you wonder where the real alpha is generated, the 10-year Compound Annual Growth Rate (CAGR) numbers speak for themselves.

While a 15% or 16% return is highly respectable, Momentum investing outpaced the closest runner-up by 3% annually, creating a massive compounding advantage over time.

The 16-Year Wealth Multiplier (Since 2010)

To see how these strategies survive different market cycles, the study featured a long-term backtest starting from 2010. Over this 16-year horizon, the differences transition from mere percentages into life-changing wealth deltas.

Look at how many times your initial capital would have multiplied under each strategy compared to the broader market index:

• Momentum: 23.0x capital growth

• Quality: 14.3x capital growth

• Growth: 12.5x capital growth

• Value: 11.8x capital growth

• Low Volatility: 11.8x capital growth

• Large Midcap 250 TRI (Benchmark): 7.5x capital growth

The Verdict: Every single factor beat the basic market benchmark 7.5x. However, Momentum completely demolished the competition, multiplying capital a staggering 23 times over.

The Global Verdict: It’s Not a Fluke

This isn't just an isolated Indian market phenomenon. Centuries of global financial data support these findings. Numerous research papers tracking asset classes across 100 to 200 years of market history consistently conclude that no factor reliably beats Momentum over the long term.

The data is undeniable. If investors fail to capture these returns, it isn't because the strategy doesn't work—it is due to human psychology and an inability to understand, trust, and strictly execute the rebalancing rules.

You don't need to overhaul your entire portfolio overnight. Momentum can be intimidating due to its fast-paced nature. Instead, adopt a gradual allocation strategy to build your execution confidence.

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Meme Of The Day