More than 50 smallcaps gain 10-41% in volatile week

Indian benchmark indices ended with marginal gains in the highly volatile week ended October 13 amid mixed data including the weak start of the Q2 earnings, falling inflation, 14 months high IIP data, while on the global front ongoing geo-political conflict, slightly higher US inflation, and persistent FII selling also checked the investors’ mood.

This week, BSE Sensex added 0.43 percent or 287.11 points to end at 66,282.74, while Nifty50 rose 97.5 points or 0.49 percent to close at 19,751.

Among broader indices, BSE Mid-cap, Small-cap and BSE Large-cap index gained 0.7 percent, 0.8 percent and 0.5 percent, respectively.

“Domestic equity markets returns were in the positive territory this week despite some global concerns like elevated global interest rates, geopolitical unrest in the Middle East and continued stress in the Chinese real estate sector. Benchmark indices like Sensex and Nifty and the BSE Midcap and the BSE Smallcap indices saw gains this week,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

“Amongst sectors, BSE Realty, BSE Metals and BSE Energy posted healthy gains during the week. Contrasting this was the BSE IT index, which saw decline during the week. Few IT companies have posted their Q2FY24 results and the outlook on discretionary spending continues to be weak. Crude oil prices recovered slightly this week from the lows of the previous week. The US 10-year bond yield corrected from the recent peaks.”

“In India, the September CPI inflation moderated to 5 percent (from 6.8 percent in August) and the IIP for August increased to 10.3 percent from an upwardly revised print of 6 percent in July 2023. Over the next few weeks, market participants can expect sector/stock-specific action depending on Q2FY24 financial performance and management commentary,” he added.

Among sectors, Nifty Realty index gained 4.3 percent, Nifty Auto index added 2.8 percent, Nifty FMCG index rose nearly 2 percent and Nifty Media index added 1.5 percent. On the other hand, Nifty PSU Bank index shed 3.2 percent and Nifty Information Technology index fell 1.6 percent.

The selling from Foreign institutional investors (FIIs) continued this week also as they offloaded equities worth Rs 2,199.99 crore. Meanwhile, domestic institutional investors (DIIs) purchased equities worth Rs 3,937.66 crore this week.

The BSE Small-cap index rose 0.8 percent. ITI, Prakash Industries, MMTC, Omaxe, GFL, Shiva Cement, Shree Global Tradefin, Gujarat Mineral Development Corporation, SpiceJet, Jai Corp, PDS and Avantel rose 20-41 percent.

Losers included Lancer Containers Lines, Themis Medicare, GM Breweries, Triveni Turbine, Dhampur Bio Organics, Jubilant Industries, Supriya Lifescience, Sterling and Wilson Renewable Energy and C. E. Info Systems (MapmyIndia).

“The Indian market rebound from the sluggish start, propelled by positive expectations on Q2 earnings and moderation in global bond yield despite concerns over the Middle East conflict continues to hover. However, the release of higher-than-anticipated US inflation data and a resulting increase in treasury yields marginally offset the positive trend by the end of the week. While domestic factors such as a significant drop in CPI data and impressive industrial production helped to sustain the broad optimism,” said Vinod Nair, Head of Research at Geojit Financial Services.

“Weak start to the result season by IT sector’s subdued revenue guidance, combined with uptick in crude oil prices affected the broad market trend. On the other hand, the realty sector performed well, fuelled by significant project launches and an uptick in pre-sales, buoyed by the onset of the festive season. Looking ahead, investors will closely monitor the further commencement of the Q2 earnings season which has high expectations like sectors Auto, Finance and Oil & Gas,” he added.

Where is Nifty50 headed?

Rupak De, Senior Technical analyst at LKP Securities:

The strength may continue as long as the index remains above 19600. Only a decisive fall below 19600 might trigger serious long unwinding in the market, till then a buy-on-dips strategy to favor the market. On the higher end, resistance is visible at 19850; above 19850, the index might move towards 20000.

Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas:

On the daily charts, the zone of 19640 – 19620 where support in the form of the 40-day average was placed acted as a cushion and prevented further decline. The rallies and corrections have been short-lived thereby only leading to increased volatility and wild swings in both directions.

The daily Bollinger bands are contracting which indicates that the index is due for consolidation. The daily and hourly momentum indicators provide divergent signals and in such a scenario a consolidation appears high probability. The range of consolidation is likely to be 19,500 – 20,100 from a short-term perspective.

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