More than 40 smallcaps give double digit return despite market falling 1%

Market remained under pressure in the first half of this week and witnessed consolidation in the second half but lost more than 1 percent breaking 3-week gaining momentum. FII outflow, mixed earnings, likely rate hike by Fed and possible recession is US post softening job data and declining manufacturing activity remained investors’ concerns.

In this week, BSE Sensex fell 775.94 points or 1.28 percent to end at 59,655.06, while Nifty50 shed 204 points or 1.14 percent to end at 17,624.

For the week, BSE largecap index shed 1 percent, while midcap, smallcap ended on flat note.

“The markets trended lower during the week gone by, as IT sector witnessed a drag owing to a weak set of numbers being declared by one of the majors. The concerns regarding global economic outlook too impacted the sentiments; a strong growth reported by China failed to meaningfully influence the bulls,” said Joseph Thomas, Head of Research, Emkay Wealth Management.

“Over the near term the markets may be expected to be volatile, led by very stock specific movements as the earnings season goes underway in full swing,” he added.

Among sectors, Nifty Information Technology index shed 5.3 percent, Media index fell 1 percent and Metal index down 0.5 percent. However, Nifty PSU Bank index added 2 percent, FMCG index up 1 percent and Oil & Gas index up 0.8 percent.

The BSE Small-cap index rose 0.3 percent. Precision Camshafts, Asian Granito India, Pokarna, Future Consumer, Patel Engineering Company, Khadim India, Binny, Titagarh Wagons, Deep Polymers, Ethos, Dish TV India, Deep Industries, Ramky Infrastructure and SVP Global Textiles added 15-33 percent.

However, Radhe Developers (India), Brightcom Group, Cressanda Solution, EKI Energy Services, Optiemus Infracom, GRM Overseas, Balaji Amines, AAVAS Financiers, Monarch Networth Capital, National Fertilizers, Paisalo Digital and BF Investment lost 10-34 percent.

“Nifty inches up in a listless and uninspiring last three sessions where prices traded within the range of 100 points without giving any clue for the positional trade,” said Rohan Patil, Technical Analyst, SAMCO Securities.

“Nifty50 on the weekly chart broke its three weeks of continuous move and slipped into weakness, and closed at 17,624 levels with a loss of 1.14%. The previous week’s index witnessed a falling channel pattern breakout on the daily chart but failed to show any positive price action further than that and has retested its breakout levels.”

“The Nifty on the weekly chart has formed a bearish candle but prices are firmly holding above its 50–week exponential moving average (EMA).”

“The validity of the bullish pattern stands above the 17,500–17,400 levels, if in case the frontline index closes below these levels then the gate is wide open till the 17,200 levels. On the higher end, resistance is capped at 17,850 levels. A break of that levels will trigger a further momentum towards 18,000 levels or even higher,” he added.

After a three consecutive week of buying, the Foreign institutional investors (FIIs) turned net sellers in this week as they sold equities worth Rs 4,643.05 crore. On the other hand, domestic institutional investors (DIIs) provided the support, as they bought equities worth Rs 3,026.27 crore.

In this month till now, FIIs bought equities worth Rs 316.67 crore and DIIs bought equities worth Rs 342.32 crore.

Where is Nifty50 headed?

Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas :

The Nifty pulled back from the support zone of 17,550 – 17,500 and closed above 17,600. Until there is a decisive break of this range the range bound action is likely to continue. On a weekly basis the Nifty has closed in the negative after three consecutive weekly gains which indicates a pause in the overall up move and until this week’s high of (17,863) is not taken out we can expect the consolidation to continue.

On the downside there are multiple supports in the range of 17,600 – 17,500 in the form of the 200- and 40-day moving average which shall provide cushion in case of a fall.

The momentum indicators on the daily and hourly time frame are providing divergent signals and hence we shall assign more weightage to the price action and wait for a decisive move beyond the extremes of the range 17,500 – 17,860.

Amol Athawale, Technical Analyst (DVP), Kotak Securities

The lacklustre trend continued to prevail as investors stayed cautious due to concerns over further rate hikes in the US and European nations and ensuing global economic slowdown. Investors are also concerned that any further disappointment in corporate earnings from bluechip companies could worsen the sentiment going ahead.

Technically, on weekly charts the Nifty has formed a long bearish candle which is largely negative. After a short term correction, the Nifty has been consistently taking support near the 200-day SMA (Simple Moving Average).

For the traders, 17,550 would be the immediate support level while 17,650 could act as an important resistance zone. Below the same, the market could slip till 17,450 -17,400. Above 17,650, the chances of hitting 17,750-17,800 would turn bright.

Meanwhile, Bank Nifty is witnessing a range bound activity, with 42,400 acting as a key resistance zone, and above the same it could rally till 42,700-42,800. On the other side, below 41,900, the index could slip till 41,500-41,200.

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