More than 50 smallcaps give double digit return as market achieves new milestone

Positive global data, increased buying from foreign investors, strong progress in monsoon and the positive impact of the HDFC merger helped Indian indices to achieve fresh milestones in the week ended June 30.

In this week, BSE Sensex rose 2.76 percent or 1,739.19 points to finish at 64,718.56, and Nifty50 gained 2.80 percent or 523.5 points to end at 19,189. The Sensex touched fresh record highs of 64,768.58 and the Nifty 19,201.70.

BSE Large-cap index gained 2.7 percent, Mid-cap rose nearly 3 percent and Small-cap index added nearly 2 percent.

Also read: Market bounces back, hits record high; all sectors in the green

“The week commenced with a relatively flat trend in the domestic market, as the global equities exhibited a negative bias due to concerns over economic growth stemming from political instability in Russia. However, positive economic surprises in the global market and the progress of the southwest monsoon provided a much-needed boost, enabling the domestic market to achieve new highs with renewed vigour,” said Vinod Nair, Head of Research at Geojit Financial Services.

“The market’s upward momentum was further supported by strong inflows from FIIs, the merger update of HDFC, and a narrowing current account deficit. Globally, investor confidence was uplifted by favourable revisions in US Q1 GDP, a decline in jobless claims, and positive outcomes from the US bank stress test conducted by the Fed.”

“IT, Pharma, and Auto sectors emerged as top performers throughout the week, making significant contributions towards overall market performance. Additionally, mid- and small-cap stocks recovered from their losses of the previous week, indicating a regained investor interest in these segments,” he added.

All the sectoral indices ended in the green with Nifty Pharma index gained 4.4 percent, Nifty auto index rose 4 percent, Nifty Information Technology index rose 3.5 percent and Nifty PSU Bank index up nearly 3 percent.

The BSE Small-cap index added nearly 2 percent with JBM Auto, Karnataka Bank, Pearl Global Industries, Jay Bharat Maruti, JK Tyre and Industries, Parag Milk Foods, Sarla Performance Fibers, Tips Industries, 63 Moons Technologies, Sree Rayalaseema Hi-Strength and Asian Energy Services rising 20-32 percent.

Losers included Vishwaraj Sugar Industries, CreditAccess Grameen, PSP Projects, Alok Industries, DMCC Speciality Chemicals, Dhampur Sugar Mills, Cerebra Integrated Technologies, Subros, Technocraft Industries (India), Puravankara, Restaurant Brands Asia, Antony Waste Handling Cell, Mrs. Bectors Food Specialities and Ashapura Minechem.

This week, Foreign institutional investors (FIIs) bought equities worth Rs 20,361.75 crore, while domestic institutional investors (DIIs) sold equities worth Rs 1,564.60 crore.

However, in the month of June, FIIs bought equities worth Rs 27,250.01 crore and DIIs purchased equities worth Rs 4,458.23 crore.

Where is Nifty50 headed?

Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities:

Heavy put writing was observed at 19,000 Strike, which was immediate support for Nifty. The support has become even stronger after Friday’s closing. The Relative Strength Index (RSI), a momentum indicator, broke its lower high formation on the daily chart, which is a positive sign for the Index.

Nifty has given a higher close on the daily chart in the last three consecutive trading sessions. Nifty can face a hurdle around 19,200 on the back of more call writing compared to put writing. However, option activity at 19,200 Strike will provide cues about Nifty Intra-day direction on Monday.

The support for Bank Nifty shifts to 44,500 after Friday’s strong closing, while the resistance for Bank Nifty is placed at 45,000. The Implied volatility (IV) of Bank Nifty (12.94) is still at the lowest end of its historical range as indicated by Implied Volatility percentile (IVP), which stands at 9 percent. This means that only on 9 percent of the days in the last one year, Bank Nifty’s IV was trading below 12.91. This also means that the Bank Nifty’s IV traded above 12.91 for 91 percent of the days in the last one year. Debit Spread option strategies are usually preferred by traders to take advantage of a low IV environment.

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

On the daily charts, we can observe that after breaking out from the 18500 – 18900 zone the Nifty has been witnessing follow-through buying interest. The daily momentum indicator, which was lagging, has triggered a bullish crossover and is now in sync with the price action. Thus, both price and momentum indicator suggest a further upside in the index. The short term and medium-term targets have been achieved and hence we are revising it upwards to 19500 and 20200 respectively.

In terms of levels, 19000– 19050 shall act as a crucial support zone while 19380 – 19400 shall act as a crucial resistance zone.

As far as Bank Nifty is concerned, the Index has decisively closed above the broad trading range 44,500 – 43,500. This indicates a breakout and also suggests that Bank Nifty could see trending moves on the upside. The daily momentum indicator has triggered a fresh positive crossover which is a buy signal. Thus, both price and momentum indicator is suggesting a further upside in the Bank Nifty. On the upside we expect it to target levels of 45,200.

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