Broader indices underperform, but 38 smallcap stocks deliver double digit returns

Broader indices underperformed the main ones in the volatile week ended April 19 due to geopolitical worries, rising crude prices, and uncertainty over the US Fed’s rate cut timing. However, 38 smallcap stocks saw an uptick as they jumped between 10 and 35 percent.

In the week gone by, the Nifty50 index shed 372.4 points (1.65 percent) to end at 22,147, while the BSE Sensex fell 1,156.57 points (1.55 percent) to close at 73,088.33.

In the broader market, the BSE SmallCap, MidCap and LargeCap indices shed 1, 2.2, and 1.7 percent, respectively.

All sectoral indices ended in the red. Nifty Information Technology index shed 4.7 percent, Nifty PSU Bank fell 3.7 percent, Nifty Realty Index dropped 2.7 percent, and Nifty Pharma index slid 2 percent.

Foreign institutional investors (FIIs) sold equities worth Rs 11,867.03 crore, while Domestic Institutional Investors (DIIs) bought equities worth Rs 9,036.33 crore.

“Indian markets staged a recovery as the week drew to a close, fuelled by strong performance in largecaps amid global uncertainties. Optimism prevailed, with hopes of limited prospects of escalation in Iran-Israel tensions. However, the domestic market failed to offset the losses sustained through the week. Globally, caution persisted as the situation in the Middle East remains fragile. Further, the potential delay of a US rate cut due to higher-than-expected inflation, robust retail sales, and elevated oil prices subdued sentiments. This was evident through notable upticks in the dollar index, US bond yields, and the price of yellow metal,” said Vinod Nair, Head of Research, Geojit Financial Services.

“Mid and smallcap stocks also corrected, highlighting concerns over valuations. Muted Q4 earnings expectations and weak IT results could extend the consolidation. FIIs continued to remain risk-averse, a trend seen since last week. Largecaps could offer solace for investors, given earnings stability.

“GDP, PMI, and jobless claims data from the US next week will provide further insights into the Fed’s policy. Additionally, Indian PMI data and Q4 results are anticipated to shape market trends in the coming week,” he added.

Sun Pharma Advanced Research Company, TruCap Finance, Gensol Engineering, Inox Green Energy Services, COFORGE, Genesys International Corporation, IFCI, Jay Bharat Maruti, and Visaka Industries were among the major smallcap losers.

On the other hand, Moschip Technologies, Solara Active Pharma Sciences, Dhani Services, Likhitha Infrastructure, MM Forgings, Manorama Industries, Savita Oil Technologies, Transformers and Rectifiers India, Gallantt Ispat, Waaree Renewable Technologies, and Elecon Engineering Company added 20-35 percent

Where is Nifty50 headed?

Osho Krishan, Sr Analyst, Technical and Derivative Research, Angel One

The market conditions will remain tentative till global uncertainty prevails, and the same can be seen on the technical charts. As far as levels are concerned, the psychological mark of 22,000 will be the intermediate support, followed by strong support in the 21,800-21,700 zone. At the higher end, the 20 DEMA is placed at 22,300, followed by a bearish gap of 22,430-22,500, which is likely to prove daunting in the near period. An authoritative breakthrough would reinvigorate the bulls of D-Street.

Going ahead, we would likely remain cautious amid the ongoing geopolitical scenario, which may be deceptive and could trap traders on either side. Hence, one needs to follow the aforementioned levels and stay abreast of  geopolitical developments. Also, it is advisable to avoid aggressive overnight bets and wait for the uncertainty to cool down. The week is also expected to be volatile amid the derivative contracts expiry; hence, a pragmatic approach in stock selection is advocated.

Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services

Markets are likely to see volatility in a broader range due to divergent cues. On the negative side, flare-up in geopolitical tensions in the Middle East, hawkish US Fed comments, and FII-selling are making investors restless. On the positive side, expectations of healthy earnings from index heavyweights and buying emerging at lower levels are indicating strength in the market.

Next week, along with global cues, focus will remain on the earnings season,  when index heavyweights like Wipro, HUL, Maruti, and Bajaj Finance will announce their results. Investors will also track economic data points like the manufacturing and service PMI data of the US and India, the US Q1 GDP number, and Japan’s policy statement.

Tejas Shah, Technical Research, JM Financial and BlinkX

Technically, the set-up is kind of mildly negative at this point with the Nifty below the crucial resistance zone of 22,300-350. A crossover beyond this is required for the bulls to be back in the game. Any immediate closing above 22,300-350 levels should bring back fresh buying momentum.

Support for the Nifty is now seen at 22,000 and 21,700-800. On the higher side, the immediate resistance zone for Nifty is at 22,150-175 levels, and the next crucial resistance zone is at 22,300-350 levels. Overall, the coming week should set up the market for a large trending move.

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