You Can Learn From The Rise of Nvidia

Today’s Market Update

The market experienced significant volatility today. The Nifty actually rose and touched the 26,000 mark. However, having been on a continuous upward trend for several days, it succumbed to selling pressures at that high level, giving up virtually all the wonderful gains it had accumulated.

There was no fresh news to really support the market today, and it seems that the Nifty may need some more time near 26,000 before it can actually stage a breakout going forward.

• In the last four sessions, the Nifty was moving up very sharply from around 25,300 levels, reaching a top of 26,010 today. It then gave up about 120 points towards the close, settling at 25,879.

• The Nifty Junior was also very flat, ending the day at a marginal 0.06% change. Midcaps were down 0.32%, giving up some of the gains made yesterday.

• Small caps were also down 0.4%, and they have been somewhat slower than the rest of the market, not really participating in the recent upward run.

• The Nifty Bank was up 0.18%, which is not consequential but shows it is still hanging in there near the top.

• Gold is up another 1.02%.

• Silver is up even more significantly, at 1.86%. The daily chart for silver in rupee terms shows it has actually surpassed its previous high.

Other Market Triggers

• Many stocks were in the green this morning, but by the end, names like Hindalco, TCS, ONGC, Shriram Finance, Bajaj Finance, ITC, BEL, and HDFC all lost ground.

• Asian Paints, however, appears to be the new market favorite, closing up 3.96% and hitting a new 52-week high. Power Grid, L&T, Indigo, Bharti Airtel, and Hindalco also posted gains.

• In the Nifty Next 50 space, commodities were leading, with Vedanta and Hindustan Zinc both up. Other stocks that performed well included MotherSon, Adani, Hyundai, and Divi's Lab, alongside gains in DLF and LIC.

• Losers in this segment included Varun Beverages, Mazdock, Solar Industries, PNB, REC, United Spirits, and Naukri.

• In the Mover of the Day segment, Infibeam shares jumped 8% after its profit surged 51% and revenues hit record highs, with the stock moving 8% higher from its previous levels.

U.S. Market Update

• The US markets in the previous session saw the Dow Jones go up 0.6%, while the S&P 500 and Nasdaq were absolutely flat, at 0% and -0.26% respectively, and the Russell 2000 was down 0.3%. Over the last month, the leading US indices—Nasdaq, Dow Jones, and S&P—have performed well.

• Some of the notable gainers yesterday included AMD, which was up 9%, bouncing back strongly after dropping just a few days ago. Other gainers were AbbVie Inc. up 3.5%, UnitedHealth, Goldman Sachs, and Cisco, with Cisco rising 3% for the day.

What to watch next ?

• The market is showing resilience; it is not significantly falling on bad news days and is taking its sweet time to achieve a new high.

• Gold is now just about 2% away from an all-time high, despite the recent suggestions of a top and a reversal down.

• While a potential drop is not ruled out, if gold breaks out from here and starts another upward leg, the situation will change drastically. It is important not to presume what will happen but to go with the trend.

• For a short-term trader, getting out at the presumed top and possibly getting back in now might be the strategy.

• However, for a long-term player, the recent move was merely a time and price correction, and they should not have been overly concerned.

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🚀 Nvidia: The New Global Titan

The Unprecedented Rise to $5 Trillion

The data is astonishing. Nvidia is now the largest company globally, boasting a market capitalization of approximately $5 Trillion. This figure alone is difficult to comprehend.

• A National Comparison: To put this into perspective, the combined market capitalization of all listed stocks in India is reportedly close to this figure—around $5.5 Trillion. A single US company has reached a size comparable to the entire Indian stock market.

• A GDP Comparison: Furthermore, the company's valuation is stated to be larger than the economy of Japan and nearly equivalent to the GDP of Germany. This level of growth and sheer size is described as "absolutely amazing and astonishing."

US Market Dominance: 8% and Growing

Nvidia’s colossal valuation translates directly into immense dominance within the US stock market itself.

Nvidia currently accounts for nearly 8% of the entire US market allocation. This is a level of single-company market concentration that has not been seen in the last 50 years, with a single stock exceeding 8% of the total market capitalization.

• A Historical Look at Dominance:

  • 1950s-70s: General Motors held a dominant share of 6% to 10%.

  • Later Periods: IBM, AT&T, GE, Microsoft, Exxon Mobil, and more recently, Apple (from 2012 onwards) have all held significant, dominant market shares.

  • The Difference Now: While these companies were dominant in their time, Nvidia's current 8% allocation marks a historical high point in concentration since the era of the mega-dominators like IBM and General Motors decades ago.

📈The Power of Trend Following

Follow the Trend and Stick with the Winners.

When a company becomes this large, many investors start to pull out, fearing a peak. However, the data suggests that once a company achieves this level of dominance (as seen in the historical chart references), it often maintains a significant market portion for many years.

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