Market falls 1% in the week amid volatility; these 37 smallcaps climb 10-36%

The Indian markets lost 1 percent amid mixed global and domestic cues, in the volatile and truncated week ended March 10. Large deal in Adani group stocks and extended buying from FIIs helped the market record decent gains in the first two sessions. However, indications of further interest-rate hike by Fed chair spooked the market, which led FIIs turned net sellers in last two sessions.

During the week, BSE Sensex shed 673.84 points or 1.12 percent to close at 59,135.13, while Nifty50 lost 181.45 points or 1.03 percent to end at 17,412.90.

In the month of March, BSE Sensex and Nifty added 0.3 percent and 0.6 percent, respectively.

Among the broader indices, the BSE Midcap index ended on flat note, and Largecap index shed 0.8 percent, while Smallcap ended with moderate gains.

“Indian equity markets continued to be concerned due to the slowdown, increased interest rates, and valuation, as well as an upward trend in US inflation and a negative trend in India,” said Shrikant Chouhan, Head of Equity research (Retail), Kotak Securities.

“The Nifty Index fell by 1.08 percent last week, while the Sensex fell by about 1.13 percent. While the BSE SmallCap Index increased by 0.44 percent, the BSE Midcap Index only lost 0.09 percent.”

“The remarks of Fed Chairman Powell, who suggested that the Fed may need to raise interest rates more than initially anticipated, had an effect on the mood of the world markets,” he added.

On the sectoral front, Nifty Realty index shed over 3 percent, PSU Bank 2.8 percent and Nifty Bank nearly 2 percent. On the other hand, Nifty energy and oil & gas indices rose 2 percent and 1.6 percent, respectively.

The BSE Small-cap index ended marginally higher. Seamec, Olectra Greentech, Deep Polymers, Sequent Scientific, Asian Energy Services, Mangalore Chemicals and Fertilisers, WPIL and SVP Global Textiles rose more than 20 percent each, while Hinduja Global Solutions, GRM Overseas, RPG Life Sciences, Oricon Enterprises, Equitas Small Finance Bank, Home First Finance Company India, Cressanda Solution and Jyoti Resins and Adhesives were among the laggards.

“The initial gains in the domestic market during the week were a result of improved market sentiment owing to the foreign bulk deal at Adani, the oversold stage of the domestic market, and FII buying. However, the global market has fallen back into the grip of uncertainty following the Fed chief’s comment that signalled the possibility of a prolonged and faster rate hike, contradicting a dovish comment made by another Fed official last week,” said Vinod Nair, Head of Research at Geojit Financial services.

“The market now anticipates a 50 bps rate hike, which has pushed the dollar index to a three-month high. Selling intensified towards the end of the week following further negative cues from the US market and as the market awaited the release of US unemployment and non-farm payroll data, which will have a significant impact on the upcoming Fed meeting.”

“However, higher-than-expected jobless claims in the US helped alleviate some concerns about the Fed becoming more-strict,” he added.

The Foreign institutional investors (FIIs) bought equities worth Rs 1,769.68 crore, and domestic institutional investors (DIIs) bought equities worth Rs 1,211.97 crore. However, in this month so far FIIs and DIIs bought equities worth Rs 14,361.85 crore and 6,929.35 crore.

Where is Nifty50 headed?

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

Technically, the Nifty has formed a strong bearish candle on weekly charts and it is comfortably trading below the 20 and 50-day SMA.

For the positional traders, 17,550 would act as a medium term resistance zone and below the same, the index could slip till 17,150.

On the flip side, a minor pullback rally is possible, if the index trades above 17,425 and could move up to 17,480-17,500. Meanwhile, the Bank Nifty also breached the important support level of 41,000 or 20-day SMA (Simple Moving Average) which is broadly negative. Below the same it could retest the level of 40,000-39,800.

Ajit Mishra, VP – Technical Research, Religare Broking

The fresh turmoil on the global front has shifted the market tone and Nifty has again reached closer to the previous swing low i.e. 17255 levels. Any rebound towards the 17,500-17,600 zone would attract selling pressure while the Nifty may find support around the 17000-17200 zone.

Participants should align the positions accordingly and focus more on risk management citing the erratic global cues.

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.