Smallcap index sheds over 7% as more than 300 stocks fall between 10-31%

After a firm start, the bears took full charge at Dalal Street with the Indian benchmark indices losing more than 2 per cent in the week ended December 23 as rising Covid cases kept investors edgy.

The BSE Sensex lost 1,492.52 points or 2.43 per cent to end at 59,845.29 and Nifty50 shed 462.2 points or 2.52 per cent to end at 17,806.8 levels.

Both the benchmarks have lost 5 per cent each in this month for now.

Among sectors, the Nifty PSU index shed more than 10 per cent, Nifty Media index lost 9 per cent, Nifty Realty nearly 7 per cent and Nifty Metal index fell 6.4 per cent. However, Nifty Pharma index added 1.5 per cent.

During this week, BSE small-cap index shed 7.6 per cent, mid-cap index lost 5 per cent and large-cap fell 3 per cent.

“Domestic equity markets corrected this week reacting to negative global cues. Sensex 30 and Nifty 50 indices corrected ~2% this week, whereas the fall in the BSE midcap and NSE smallcap indices was much sharper. Most sectors reported negative returns this week due to broader weakness in the markets. BSE Pharma index was the bright spot as it gave positive returns led by re-emergence of covid scare,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

“Globally markets remained volatile as they reacted to reported rise in Covid cases in China and strong US GDP data. Brent crude oil price continue to trade around the $80 per barrel mark whereas the US 10 year treasury yield saw some upward movement this week. The Covid case count in China and concern about possible recession will continue to influence global equity market in the near term,” he added.

Foreign institutional investors (FIIs) continued the selling in this week also as they offloaded equities worth Rs 979.48 crore. On the other hand, domestic institutional investors (DIIs) increased the buying as they bought equities worth Rs 8,545.06 crore.

FIIs have sold equities worth Rs 8,469.53 crore and DIIs bought equities worth Rs 19,096.68 crore in this month so far.

The BSE small-cap index tumbled 7.6 per cent with more than 300 stocks seeing double digit fall. Lancer Containers Lines, Good Luck India, Andrew Yule and Company, Mahanagar Telephone Nigam, BCL Industries, Infibeam Avenues, Ramky Infrastructure, Taj GVK Hotels & Resorts, Deepak Fertilizers, National Fertilizers, Rashtriya Chemicals and Fertilisers, HLV, Punjab & Sind Bank, IFCI, Hindustan Foods, Central Bank of India, Ujjivan Financial Services, South Indian Bank, RSWM and SEPC lost between 20-31 per cent.

On the other hand, Morepen Laboratories, Syncom Formulations, IOL Chemicals and Pharmaceuticals, Nectar Lifesciences, JBM Auto and Nureca added 10-34 per cent.

Where is Nifty50 headed?

Apurva Sheth, Head of Market Perspectives, Samco Securities

The immediate support for the Index is placed around 17,700 levels followed by 17,400 levels and resistance is capped at 18,200 levels. We would wait on the sidelines and not commit to fresh longs yet.

Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas

On the weekly charts, Nifty has reached the 20-week moving average (17839) which can provide some relief during the next week however, it is likely to be short lived and overall short term trend has turned negative.

On the downside we expect the Nifty to drift lower till 17,560 which is the 61.82% fibonacci retracement level of the rise from 16,748 – 18,889. In terms of levels, crucial support is placed at 17,730 – 17,700 and the immediate resistance stands at 17,930 – 18,000.

Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services

Going ahead, we expect further weakness in the equity given the worry over the potential risk from surging Covid and recessionary fears as central banks globally continue to remain hawkish.

We expect sectors like Entertainment, QSR, Hotels, Travel & Tourism to see decline as government has initiated various precautionary measures. However, any decline will be good opportunity to gradually accumulate fundamentally quality stocks.

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

Technically, after a long time the index closed below the 50-day SMA (Simple Moving Average) and also formed a long bearish candle on weekly charts which is broadly negative.

For traders, as long as the index is trading below 18,000, the correction wave is likely to continue and below the same, the index could slip till 17,600-17,500. On the flip side, 18,000 could act as sacrosanct resistance zone. The dismissal of 18,000 could push the index till 50-day SMA or 18,150-18,200.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.