The Incredible Growing Stock Market — Barrons.com

Sudeep Shah of SBI Securities is bullish on Uno Minda, and Vijaya Diagnostic Centre. "Uno Minda is on the verge of giving horizontal trendline breakout on a daily scale, and currently, it is trading above its short and long-term moving averages," he said in an interview with Moneycontrol.

Despite the correction in the frontline indices, Vijaya Diagnostic is trading at an all-time high, all the moving averages and momentum-based indicators are suggesting strong bullish momentum in the stock, he believes.

Further, he is also bullish on Marico, and Bajaj Finserv. "Both are strongly outperforming the frontline indices and are also likely to maintain outperformance in the short term," said the Head of Technical and Derivative Research at SBI Securities.

Do you see any possibility of Nifty as well as Bank Nifty testing the low of June 4 (i.e. Lok Sabha election results day)?

After two weeks of consolidation, the benchmark index Nifty has resumed its downward trajectory, shedding over 2% in the past week and closing below the crucial 23,500 mark. This decline has resulted in the formation of a sizeable bearish candle on the weekly chart. Notably, for the last three trading sessions, the index has been trading below its 200-day EMA, a critical long-term support level, which adds to the bearish undertone and raises concerns about further downside risks.

Most notably, the past week saw significant corrections in the Nifty Midcap and Nifty Small Cap indices, which plummeted by 5.77% and 7.29%, respectively. This sharp decline highlights broad-based selling pressure across the market, signalling caution among participants beyond the frontline indices. These indices slipped below their 200-day EMA for the first time after April 2023.

We believe the prior swing low zone of 23,260-23,200 will act as crucial support for the index. If the index slips below the level of 23,200, then we may witness further correction in the index up to the 22,800 level. On the upside, the 200-day EMA zone of 23,670-23,700 will act as a crucial hurdle for the index.

On Thursday, TCS officially kicked off the Q3 earnings season, setting the stage for what could be a defining period for the markets. With investors closely monitoring corporate performance amid global and domestic challenges, these results are likely to play a pivotal role in shaping market sentiment. As the earnings unfold, the focus will remain on growth trajectories, margin pressures, and management outlooks, making this season a potential make-or-break moment for market direction.

Do you believe the higher highs-higher lows formation will continue in the Nifty IT index?

Yes, Nifty IT is currently outperforming the frontline indices. Recently, it formed an Adam & Adam Double Bottom pattern on the daily chart and confirmed a neckline breakout on Friday. Furthermore, it is trading above both its short and long-term moving averages, with the daily RSI (Relative Strength Index) approaching the key 60 levels. These technical indicators suggest that the Nifty IT index is poised to maintain its upward trajectory in the coming sessions.

What are your top 2 bets for the next week?

Uno Minda

The stock is on the verge of giving a horizontal trendline breakout on a daily scale. Currently, it is trading above its short and long-term moving averages. These averages are on a rising trajectory, and they are in the desired sequence. Further, the daily RSI is quoting above 60, and it is in rising mode, which is a bullish sign. Hence, we recommend accumulating the stock in the zone of Rs 1,100-1,090 level with a stop-loss of Rs 1,060 level. On the upside, it is likely to test the level of Rs 1,150, followed by Rs 1,170 in the short term.

Vijaya Diagnostic Centre

Despite the correction in the frontline indices, the stock is trading at an all-time high, which indicates strong outperformance. The stock is moving higher along with the robust volume. Further, as the stock is trading at an all-time high, all the moving averages and momentum-based indicators are suggesting strong bullish momentum in the stock. Hence, we recommend accumulating the stock in the zone of Rs 1,245-1,235 level with a stop-loss of Rs 1,190 level. On the upside, it is likely to test the level of Rs 1,320, followed by Rs 1,350 in the short term.

Is the Kalyan Jewellers looking oversold?

No, Kalyan Jewelers has faced a sharp correction of over 21% after marking a high of Rs 795.40 in just six trading sessions. During this decline, the stock slipped below its 20, 50, and 100-day EMA levels. The daily RSI is currently at 28.48, indicating there could still be room for further downside. However, the 200-day EMA zone of Rs 596-Rs 590 is expected to act as a support level in the short term.

Are you bullish on Marico?

Yes, the stock is strongly outperforming the frontline indices. The ratio chart of the stock as compared to the Nifty index has given a consolidation breakout, which shows strong outperformance. Also, the stock is outshining the Nifty FMCG index by a decent margin. Further, it is trading above its short and long-term moving averages. The daily RSI is in bullish territory.Hence, we recommend accumulating the stock in the zone of Rs 680-670 level with a stop-loss of Rs 650 level. On the upside, it is likely to test the level of Rs Rs 710, followed by Rs 730 in the short term.

Are the charts signalling a strong buy on Bajaj Finserv?

Yes, recently, the stock has given a neckline breakout of a double bottom pattern along with the robust volume. Thereafter, since the last six trading sessions, the stock has been oscillating in a narrow range, and it is strongly outperforming the frontline indices. The daily RSI is taking support near the 60 zone, which is a bullish sign as per RSI range shift rules. Hence, we believe the stock is likely to outperform in the short term.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

By Jacob Adelman

Booze and beer companies are starting off the year on the rocks. Potential tariffs, a surgeon general health warning, and persistent inflation concerns among consumers have weighed on businesses, such as Constellation Brands and Anheuser-Busch InBev.

Modelo and Corona beer-maker Constellation shares fell 17% to close at $182 on Friday after reporting net sales for its quarter ended Nov. 30 that missed consensus estimates. The company also cut its fiscal-year outlook to reflect "reduced growth expectations for net sales and operating income."

The move left shares of Constellation, whose dependence on Mexican lagers could make it especially vulnerable to President-elect Donald Trump's proposed tariffs, down 18% since the last trading day of 2024.

Anheuser-Busch InBev, whose brands include Budweiser and Bud Light, is down about 8% from the end of last year. Molson Coors has dropped 9% in the same span, while Brown-Forman — the maker of Jack Daniel's whiskey and Finlandia vodka — has fallen 11%. Diageo, which manufactures Guinness beer and Tanqueray gin, has slipped 4%.

The S&P 500 index is down about 1% over the period.

One potential reason for the alcoholic beverages' lagging performance is surgeon General Vivek Murthy's Jan. 3 advisory that outlined the link between alcohol consumption and cancer risk. Murthy called for actions to increase public awareness, such as requiring more prominent warning labels on alcoholic beverages.

Investors are also worried that potential tariffs on goods produced overseas could force companies in the import-heavy alcohol industry to raise prices, or prompt trading partners to increase levies on U.S.-made products.

Trump said in November that his administration plans to impose a 25% tariff on goods imported from countries including Mexico, and has assailed trade imbalances with nations including those in the European Union.

A "Trump-sized shadow in the form of tariffs looms over the upcoming year" for companies including Constellation and Brown Foreman, investment bank Bernstein wrote in a report on Wednesday.

Bernstein "continues to like" Constellation and Brown Foreman "for fundamental and valuation related reasons, but fully acknowledges that there is no silver bullet until clarity on tariffs is obtained," it wrote.

Consumers, meanwhile, remain wary of the higher prices that have been passed along to them by companies — including wine and spirit makers — during the recent inflationary period, investment bank TD Cowen wrote in a report this week.

Many "food and beverage brands need to reset their prices and margin structures lower to improve their value perception with consumers," Cowen wrote in that report, also from Wednesday.

Constellation CEO Bill Newlands said in a conference call with analysts Friday the company continues "to face the subdued spend and value seeking behaviors that emerged among legal drinking age consumers" in the previous quarter.

Write to Jacob Adelman at jacob.adelman@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

By Randall W. Forsyth

Just a few stocks drive all the returns of the equity market while the vast majority matter little. Indeed, most of them just detract from gains produced by the leaders.

This isn't about the Magnificent Seven behemoth tech stocks, which have accounted for the lion's share of equity returns over the past two years. A study of U.S. stocks' returns over nearly a century finds that the median stock actually lost money since 1926 — even while a dollar invested across all stocks on average grew to $229.40 by the end of 2023.

Of course, the concentration of outsize returns in just a few stocks is nothing new and, in fact, appears to be the norm over the modern history of equity markets that began in the first Roaring '20s of the last century.

All this comes from recent research by Arizona State University finance professor Hendrik Bessembinder. Examining results from 29,078 common stocks in the database of the Center for Research in Security Prices, or CRSP, going back to Dec. 31, 1925, he found that most stocks lost money and that a few big winners generated huge returns over time. His 2020 research noted that 96% of stocks merely matched the return of one-month Treasury bills from 1926 through 2019. From that, one might conclude that the risk and expense of buying equities isn't worth the trouble. After all, only 86 stocks produced $16 trillion in wealth over that span.

In fact, the professor's recent paper does seem to suggest that stock investing is futile — though it's a little more complicated than that. Looking at the CRSP database through the end of 2023, he found most stocks, 51.6% to be exact, lost money, with a median negative return of 7.41% over the 98-year span.

But the average, or mean, return across all stocks for that period was 22,840%. In other words, $1 invested grew into $229.40 owing to the outsize contribution of a few winners. Over that same span, inflation amounted to 1,614%, or 2.94% per annum.

That 98 years included the crash of 1929, from which the Dow Jones Industrial Average took a quarter-century to recover from. It also covered the fallow stretch from the peak of the 1960s' go-go years, when the Dow first hit the then-magic 1,000 level, and the 1973 peak of the Nifty Fifty, through the subsequent so-called Death of Equities until the liftoff of the great bull market of the 1980s, when blue chips would finally regain the 1,000 mark for good.

While the majority of stocks lost money from 1926 through 2023, 17 stocks returned over five million percent, turning a dollar invested in them into $50,000. The biggest return came from Altria Group, formerly Philip Morris, which turned a buck into $2.65 million during that time. Lottery ads tout "a dollar and a dream" to lure punters with dreams of instant fortunes. But selling butts over time did better for investors (if not consumers of tobacco).

Runner-up was Vulcan Materials, which turned an investment of $1 into $393,492, according to Bessembinder's analysis. Altria returned 16.29% per annum over those 98 years, while Vulcan, which sells crushed stones, sand, and gravel for construction, returned 14.05% a year. Those returns demonstrate, he says, that consistent but relatively modest returns from seemingly staid businesses can generate fortunes over decades.

It shouldn't be a surprise that the headiest annual returns came from some of the Magnificent Seven megacap tech stocks. Among companies with at least 20 years of return data, Nvidia, natch, tops the standings with a 33.38% annual compound return from Jan. 22, 1999, through 2023, during which $1 would have grown to $1,316 over the study's span. (That doesn't include Nvidia's spectacular 171.2% return notched in 2024.)

Other world-beaters were No. 3 Netflix, which returned 32.06% per annum from May 23, 2002 through 2023, growing $1 into $406.94. That was followed by Mag 7 member Amazon.com, which returned 31.87% from May 15, 1997, through 2023, growing $1 to $1,551.73. The greatest total increase in a $1 stake among companies with a 20-year-plus track record was achieved by Home Depot, which grew a buck to $16,627.40 from its initial public offering on Sept. 22, 1981, through 2023, a product of 25.87% annual returns compounded over more than 42 years.

It would seem that these data demonstrate the wisdom of humorist Will Rogers' investment advice: "Don't gamble. Take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it."

While Bessembinder found that most stocks fell into the latter category, the overall equity market returns are strongly positive over time. Stocks that generated cumulative returns of more than five million percent over 98 years did so with relatively modest annualized returns averaging 13.5%,

By contrast, companies with the highest absolute annual returns tend to fizzle quickly. Bessembinder cites Ascend Communications, which, during the dot-com daffiness, posted an annual return of 119.64% between May 13, 1994 and June 24, 1999, until it was taken over by Lucent Technologies.

The lesson from his study would seem to be to stay invested in the market and let the winners run, which results in their having an outsize weight in an unmanaged index. Rebalancing to reduce the winners' outsize presence has been famously likened by the legendary Fidelity Magellan manager Peter Lynch to "pulling out the flowers and watering the weeds."

That also means accepting extended periods of lackluster returns, such as periods following the 1929 and 1973 peaks. Recently, Goldman Sachs forecasted paltry S&P 500 annual returns of 3% for the next 10 years. No less a long-term bull than Warren Buffett seemed to agree, building Berkshire Hathaway's cash hoard to over $300 billion.

Still, history shows that sticking with stocks works over the very long term.

Write to Randall W. Forsyth at randall.forsyth@barrons.com

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Investor Sentiment Readings

High bullish readings in the Consensus stock index or in the Market Vane stock index usually are signs of Market tops; low ones, market bottoms.

 
                              Last Week  2 Weeks Ago  3 Weeks Ago 
Consensus Index 
Consensus Bullish Sentiment   63%        65%          67% 
AAII Index 
Bullish                       34.7%      35.4%        37.8% 
Bearish                       37.4       34.2         34.1 
Neutral                       28.0       30.4         28.0 
Market Vane 
Bullish Consensus             69%        70%          72% 
TIM Group Market Sentiment 
Indicator                     46.2%      38.8%        48.3% 
Sources: Consensus Inc.; American Association of 
Individual Investors; Market Vane; TIM Group 
 
 

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Wednesday 1/15

Fourth-quarter earnings season kicks off with big banks and brokerages announcing results. BlackRock, Citigroup, Goldman Sachs Group, JPMorgan Chase, and Wells Fargo all report before the opening bell on Wednesday. Bank of America and Morgan Stanley follow suit on Thursday.

The Bureau of Labor Statistics releases the consumer price index for December. Economists forecast a 2.9% year-over-year increase in the CPI, two-tenths of a percentage point more than in November. The core CPI, which strips out volatile food and energy prices, is expected to rise 3.3%, matching the November figure. The annual change in the CPI has ranged from 2.4% to 2.9% over the past five months, but getting to the Federal Reserve's target of 2% has proved to be a sticky problem.

Thursday 1/16

Taiwan Semiconductor Manufacturing and UnitedHealth Group hold conference calls to discuss quarterly results.

The Census Bureau reports retail and food services sales for December. Consensus estimate is for a 0.6% month-over-month increase, after a 0.7% gain in November. Excluding autos, retail sales are seen rising 0.5%, three-tenths of a percentage point more than previously.

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The WSJ Dollar Index is up 0.62 point or 0.60% this week to 103.61

• Largest one-week point and percentage gain since the week ending Dec 20, 2024
• Up for six consecutive weeks
• Up 3.66 points or 3.67% over the last six weeks
• Largest six-week point and percentage gain since the week ending Nov 22, 2024
• Longest winning streak since the week ending Nov. 22, 2024, when the market rose for eight straight weeks
• Up 14 of the past 15 weeks
• Today it is up 0.37 point or 0.36%
• Fourth highest close in history
• Largest one-day point and percentage gain since Thursday, Jan. 2, 2025
• Up for four consecutive trading days
• Up 1.07 points or 1.04% over the last four trading days
• Largest four-day point and percentage gain since Monday, Dec. 23, 2024
• Longest winning streak since Friday, Dec. 13, 2024, when the market rose for six straight trading days
• Up seven of the past nine trading days
• Off 1.46% from its record close of 105.14 hit Tuesday, Sept. 27, 2022
• A new 52-week high
• Highest closing value since Thursday, Nov. 3, 2022
• Up 8.71% from its 52-week low of 95.31 hit Friday, Sept. 27, 2024
• Rose 6.92% from 52 weeks ago
• Month-to-date it is up 0.83%
• Year-to-date it is up 0.85 point or 0.83%

Data based on 5 p.m. ET values

Source: Tullett Prebon and Dow Jones Market Data