Market snaps four week rally but 43 smallcap stocks gain 10-26%

After witnessing four weeks of continued winning momentum, the market remained lackluster and settled with marginal losses for the week ended November 18.

During the week, BSE Sensex declined 131.56 points or 0.21 percent to end at 61,663.48, while the Nifty50 lost 41 points or 0.22 percent to close at 18,307.7 levels.

Among sectoral indices on the NSE, Nifty PSU Bank added 2.3 percent and Nifty bank gained 0.7 percent. On the other hand, Nifty Media shed 5.3 percent, Nifty Auto fell 2 percent, Nifty FMCG and Energy dropped 1.7 percent each.

BSE Mid-cap shed 1.3 percent, BSE Small-cap lost 0.8 percent and BSE Large-cap Index retreated 0.5 percent.

“The benchmark indices witnessed volatile activity. Among Sectors, Media index lost the most, shed over 5 percent whereas PSU Bank index outperformed, rallied over 2%. At the beginning of the week, the Nifty consistently witnessed profit booking near the 18400 resistance zone. Technically, intraday reversal formations and bearish candle on weekly charts indicate indecisiveness between the bulls and bears,” said Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities.

“Further to our perception, the medium term index formation is still on the positive side. Hence, buying on short term correction and selling on rallies would be the ideal strategy for the traders. 18200 would act as a key support zone on the flip side 18400 and 18550 could be the important hurdles, below 18100 uptrend would be vulnerable,” he added.

Foreign institutional investors (FIIs) bought equities worth Rs 349.2 crore of equities, while domestic institutional investors (DIIs) turned net buyers in this week as they bought equities worth of Rs 2,274.97 crore.

The BSE Small-cap index fell 0.8 percent with Chemcon Speciality Chemicals, SMS Pharmaceuticals, Kopran, Gayatri Projects, Nureca, Ashiana Housing and Cressanda Solution losing 15-22 percent.

On the other hand, Kamdhenu, Kirloskar Oil Engines, GOCL Corporation, Rail Vikas Nigam, Alicon Castalloy, Atul Auto, JTEKT India, Tanfac Industries, Timken India and Hindustan Construction Company surged 20-26 percent.

“During the week, direction of the domestic market was largely driven by the trend of global peers. Global markets were surging in expectation that the Fed will scale back its aggressive rate hike in reaction to easing US inflation data. However, the euphoria was dashed by better US retail sales in October and aggressive remarks from Fed officials,” said Vinod Nair, Head of Research at Geojit Financial services.

“Domestic CPI inflation has moderated to 6.8% owing to declines in food and commodity prices, however, it remained above the RBI’s tolerance level. The CPI is estimated to fall within the range from Q1 FY24. Although domestic macroeconomic indicators and FII inflows are favourable, negative vibes from global markets and premium valuation compared to peers, the domestic market traded with caution,” he added.

Nair believes, in the absence of major domestic triggers, the domestic market is expected to continue its focus on global trends. Considering the current market scenario, he recommends a balanced approach with a mix of equity & debt, 60:40 for an average risk-averse investor, as interest yields are becoming attractive, and the economy is slowing.

The BSE 500 index lost 0.68 percent during the week. One 97 Communications (Paytm), Star Health & Allied Insurance Company, Sun TV Network, DCM Shriram, Deepak Fertilizers, Chalet Hotels, Restaurant Brands Asia, EIH and Thermax slipped 10-13 percent.

On the other hand, Rail Vikas Nigam, Timken India, Ircon International, Housing & Urban Development Corporation, Redington, Indian Railway Finance Corporation, IFB Industries, IIFL Finance, Esab India, Indiabulls Real Estate, RHI Magnesita India and Union Bank of India rising 10-23 percent.

Where is Nifty50 headed?

Joseph Thomas, Head of Research, Emkay Wealth Management

Markets would look forward to the developments in Europe and the statements from Fed officials on their future stance. Though price pressures have ebbed, the retail inflation numbers are too high for the comfort of the central banks, especially in the US and India.

At the same time, the prominent view is that probably inflation has peaked and that central banks might still hike rates but the quantum of hikes would be more moderate.

Some signs of sluggishness in growth could set in soon due to the aggressive rate action in the last few months. Markets would focus on the actual numbers to get a sense of the trajectory of inflation and official policy as well.

Ajit Mishra, VP – Research, Religare Broking:

Markets are indicating that the prevailing consolidation is likely to continue and Nifty should decisively cross 18,450 levels to regain strength.

Meanwhile, we reiterate our view to focus more on sector/stock selection citing restricted participation. Besides, we’re observing breakout failures across sectors, so maintain strict risk management rules also in place.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas

The Nifty witnessed muted action in the week gone by & ultimately posted a negative weekly close after four consecutive positive weeks.

The short term momentum indicators have been showing negative divergence, which is a sign of weakness & the price action is expected to follow the suit.

Going ahead, the Nifty is expected to tumble towards 18100-18000 in the short term. On the higher side, 18450 has been acting as a resistance for the index and will continue to act as a cap for the short term.

The broader end of the market is expected to see deeper cut in the short term.

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