Over 50 smallcaps gain up to 39% as market bounces back

The equity market broke a two-week losing streak to end a percent higher in the week ended November 3 helped by healthy Q2 numbers, hefty GST collections, strong auto sales, a fall in crude prices and cooling US yields after the Federal Reserve held interest rates steady for the second time in a row.

During the week, the 30-pack Sensex rose 0.91 percent to close at 64,363.78, while the broad-based Nifty added 0.96 percent to end at 19,230.60.

Broader indices outperformed the benchmarks. The BSE midcap and smallcap indices added 2 percent, while the largecap index was up 1.2 percent.

The market started the week on a cautious note, influenced by the uncertainty surrounding the US Fed’s policy meeting but as the week progressed, the apprehension dissipated and the sentiment rebounded, Vinod Nair, Head of Research at Geojit Financial Services said.

The turnaround was partly attributed to a modest decline in oil prices, which raised optimism about a potential pause in Fed actions. Stable domestic macroeconomic PMI and robust corporate earnings also helped the market recover initial losses, he said.

The auto sector faced challenges despite positive sales figures, while mid and small-cap sectors demonstrated noteworthy performance, driven by strong demand and bright economic outlook, Vinod Nair said.

“Investors will closely scrutinise the economic data from the US, including the PMI and nonfarm payroll releases, to gain further insights into US economic performance,” he said.

The corporate earnings outlook for H1 was favourable, and the H2 earnings were expected to be positive as well, which could lead to earnings upgrades. “Next week, market is anticipating results from major PSU banks, auto, and metal sectors with an optimistic outlook,” he added.

Among sectors, the BSE realty index added 10 percent, telecom index 5.3 percent, oil & gas index gained 3.6 percent, while the auto index shed nearly a percent.

Foreign institutional investors (FIIs) continued to sell, as they sold equities worth Rs 5,522.38 crore, while domestic institutional investors (DIIs) bought shares worth Rs 3,540.25 crore during the week.

The BSE smallcap index rose nearly 2 percent with Jaiprakash Associates, SEPC, Greenlam Industries, Apollo Micro Systems, Suven Life Sciences, Jaiprakash Power Ventures and Jindal Saw adding over 20 percent each.

On the other hand, Vikas WSP, Syrma SGS Technology, Archean Chemical Industries, Linc, Vimta Labs, Thangamayil Jewellery, Prudent Corporate Advisory Services, Savita Oil Technologies, Gujarat Mineral Development Corporation, Aditya Vision and Refex Industries lost between 10 and 17 percent.

Where is Nifty50 headed?

Ajit Mishra, SVP-Technical Research, Religare Broking

We reiterate a cautious view on the Nifty and suggest waiting for a decisive break above 19,400 for a sustained recovery. There is no shortage of stock-specific opportunities, so traders should focus on stock-selection.

Kunal Shah, Senior Technical & Derivative Analyst, LKP Securities

The maximum put writing is at 19,200, which may act as strong support for Nifty. The maximum open interest is in the 19,300 call option, so, one should only be bullish on Nifty if it closes above its crucial 100-day moving average placed at 19,300.

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