Market ends 3rd week in red but over 100 small-caps gain 10-64% in September

Indian benchmark indices ended lower for the third straight week ended September 30 amid weak global cues, depreciating rupee and heightened selling by foreign investors. However, after staying weak for the first four days, the market regained some ground on Friday with the Reserve Bank of India (RBI) raising the repo rate in the expected line of 50 basis points.

The BSE Sensex lost 672 points or 1.34 percent to end the week at 57,426.92, while the Nifty50 shed 233 points or 1.34 percent to close at 17,094.3. The two benchmarks lost over 3 percent each in the entire month.

On the sectoral front, the Nifty Metal index shed 4.3 percent, the Nifty Energy index 3.4 percent and the Nifty Auto and Realty indices 3 percent each. On the other hand, the Nifty Pharma index gained nearly 3 percent and the Information Technology index added 1.5 percent during the week.

The BSE Smallcap, Midcap and Largecap indices fell 1 percent each, while the broader indices lost 0.7 percent, 2 percent and 3.8 percent, respectively, in September.

Foreign institutional investors (FIIs) sold equities worth Rs 15,862.48 crore, while their local peers, the domestic institutional investors (DIIs), balanced it by picking up Rs 15,988.29 crore of equities during the week.

In the entire month, FIIs sold equities worth Rs 18,308.30 crore, and DIIs sold equities worth Rs 14,119.75 crore.

The BSE Small-cap index was weighed down by Kamdhenu, Future Lifestyle Fashions, TruCap Finance, Gayatri Projects, Sindhu Trade Links, Morepen Laboratories, Banco Products (India), Dhani Services, Can Fin Homes, HIL and Pearl Global Industries in September.

DB Realty, Transformers and Rectifiers India, Dish TV India, Tanfac Industries, Tata Investment Corporation, Jai Corp, Venus Pipes and Tubes, Schneider Electric Infrastructure, Vinyl Chemicals (India), Aurionpro Solutions, Inox Wind, Hercules Hoist and JTL Infra, however, added 30-64 percent.

“Over the weekend, global markets felt a tremor after US Dollar Index surpassed alarming levels which obviously has a negative correlation with the equity markets. We started the week with a decent downside gap on Monday amid global weakness. As the day progressed, the selling augmented across the broader market to test the psychological level of 17000,” said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One.

“In the following session, the markets had a positive start which eventually got sold into. In fact, around mid-week, the Nifty finally sneaked below 17,000 to even enter the sub-16,800 territory. On Friday, the market had a litmus test ahead of the RBI Monetary Policy as the Nifty was placed slightly below key support of 16800. Market participants were hoping for some aid from this event and the RBI governor did not disappoint this time as we not only witnessed a V-shaped recovery post the policy; but also went on to reclaim 17000 with some authority,” Chavan said.

With Friday’s smart rally, the Nifty almost engulfed the entire week’s traded-down move and, hence, restricted the weekly losses tad above a percent. “The markets were extremely oversold, but they were reluctant to rebound as global weakness persisted throughout the week. After the RBI Monetary Policy, we have managed to reverse precisely from a key support zone and if global markets support, we may see this relief getting extended in the coming week as well,” he added.

The BSE 500 index declined nearly 2 percent in the week gone by. Losers included Adani Transmission, Adani Ports and Special Economic Zone, One 97 Communications, Hero MotoCorp, Adani Wilmar, Adani Enterprises, Adani Total Gas, Maruti Suzuki India and JSW Steel.

Where is Nifty50 headed?

Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities

What lifted the market sentiment was the RBI’s policy rate hike of 50 bps that came in as expected and its comment that India’s economy remains on strong footing despite global headwinds. The relief rally was backed by investors’ preference for growth-driving stocks from banking, automobile, realty and metal space.

However, global macro factors will continue to dictate the domestic market sentiment going ahead as any fresh spell of negative news could once again trigger the downward spiral. Technically, after a sharp selloff, the Nifty took support near 16,800 and bounced back sharply.

On the daily charts, the index has formed a long, bullish candle, and also a promising hammer candlestick on the weekly charts which is broadly positive.

For the trend following traders the 200- day SMA (Simple moving Average) and 16900 would act as a sacrosanct support zone. Above the same, the reversal wave is likely to continue till 17250. Further upside may also continue which could lift the index till 17400. On the flip side, below 16900, uptrend would be vulnerable and on further decline the index could slip till 16800-16700.

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

With most key events now behind, market finally found some strength on Friday. After 7 consecutive fall, Nifty witnessed strong rally and closed with gains of almost 300 points. It also reclaimed the 17,000 zones, making the short term technical view positive.

Nifty can now move towards 17,500-17,700 zones with key support around 17,000 and 16850. Auto and consumption sectors would be in focus ahead of monthly sales data and high demand in the ongoing Navaratri festival. Pharma sector is seeing some value buying as market focused on defensive names in times of global uncertainty.

Apurva Sheth, Head of Market Perspectives, Samco Securities:

With no major events expected in the following week, markets may be dominated by global news flows. US unemployment and domestic data such as manufacturing, deposits and loan growth numbers could drive investor sentiment next week. The volatility in oil prices and the strengthening of the US Dollar compared to other currencies will be other important factors that may affect the market. Investors must keep an eye out for stock-specific news.

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