Market snaps 2-week rally but 33 small-caps gain 10-46%

Bears overpowered bulls and rattled the street, driving the market down from its life-time high in the week ended December 9, and the benchmark indices lost over 1 percent.

The BSE Sensex fell 686.83 points or 1.09 percent to close at 62,181.67 and the Nifty50 shed 112.75 points or 1.06 percent to end at 18,496.6 levels during the week.

Among sectors, Nifty Information Technologies index shed 6 percent, Nifty Realty index fell 3.4 percent, while Nifty Energy, Pharma, and Media indices down 2 percent each.

On the other hand, Nifty PSU Bank index added 4.7 percent and Nifty FMCG index rose 2.2 percent.

During this week, BSE Small-cap and Large-cap indices lost 1 percent each, while BSE Mid-cap index lost 0.8 percent.

Foreign institutional investors (FIIs) sold equities worth Rs 4,305.97 crore, while domestic institutional investors (DIIs) pumped in Rs 3,712.08 crore.

“Equity markets in India posted negative returns this week. Key indices like BSE Sensex, Nifty 50, BSE Midcap and BSE Smallcap ended the week in the red. Among sectors, the performance was mixed. The BSE IT, BSE Healthcare and BSE Power indices reported sharp declines this week. On the other hand, BSE FMGC, BSE Capital Goods and BSE Bankex saw marginal gains,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

FPIs have been net sellers of Indian equities during the week. Domestic markets reacted to 35bps repo rate hike by the the RBI. The Monetary Policy Committee of the Reserve Bank expressed optimism on growth but tackling inflation will likely be the key focus for the central bank. Oil prices saw a sharp decline this week.

“Impact of easing of Covid restrictions by China needs to be watched out. In the US, the 10-year treasury yields have seen a steady decline over the past few weeks. The yield is now below 3.5 percent, compared to a high of 4.22 percent in November 2022. Globally, markets are awaiting the US FOMC rate hike action and commentary in their scheduled meeting next week,” he said.

The BSE Small-cap index lost 1 percent, dragged by Easy Trip Planners, Unichem Laboratories, Likhitha Infrastructure, Vakrangee, Rail Vikas Nigam, Accelya Kale Solutions, Ajmera Realty and Infra India, GE Power India, Faze Three, Cerebra Integrated Technologies, Brightcom Group, Vimta Labs, Greenpanel Industries, CreditAccess Grameen and Intellect Design Arena.

However, Optiemus Infracom, Punjab & Sind Bank, SEPC, Central Bank of India, RACL Geartech, TruCap Finance and Kamdhenu added 20-46 percent.

Where is Nifty50 headed?

Apurva Sheth, Head of Market Perspectives, Samco Securities.

The upcoming week has a host of important events lined up. The three large economies—the US, the UK, and India—will each disclose their inflation rate. As a result, the world’s markets will be closely monitoring these numbers and hoping for an improvement. Additionally, the US and UK will be making their interest rate announcements, which will keep the global markets active.

Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities

Profit taking was back in action as investors dumped IT, metal and realty stocks, even as benchmark Sensex still managed to end above the psychological level of 62000 mark. The recent trend indicates that markets may continue to exhibit intra-day volatility as investors keenly await the outcome of the US Fed’s decision on interest rate next week. More than the rate hike, investors would be more interested in knowing about the forward looking statement on inflation and rate decision going ahead.

Technically, the lower top formation on intraday charts and bearish candle on weekly charts is indicating further weakness from the current levels.

For short-term traders, the 20-day SMA (Simple Moving Average) or 18,450 would act as a sacrosanct support zone, above which, we could expect a one pullback rally till 18,700. On the flip side, below 20 day SMA or 18,450, further sell off is possible till 18,300-18,200.

Ajit Mishra, VP – Technical Research, Religare Broking:

Indications are in the favour of prevailing consolidation to continue and sustainability above 18,300 in Nifty is critical to maintain the positive tone. Among sectors, banking and FMCG look promising while others may contribute selectively. Traders should plan their positions accordingly.

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