Over 50 smallcaps fall up to 22% as market ends week 2% down

It was yet another volatile week for the Indian market which remained under pressure for the first three sessions as a banking crisis in the US rippled across the world. As US authorities moved in to limit the damage, the market regained some of the lost ground as the week wound up.

In the week ended March 17, the 30-pack Sensex lost 1,145.23 points, or 1.93 percent, to end at 57,989.90. The broad-based Nifty50 shed 312.9 points, or 1.79 percent, to close at 17,100.

Among the broader indices, BSE smallcap, midcap and largecap indices fell 2.8 percent, 2 percent, and 1.6 percent, respectively.

“Our market started the week on a bleak note taking cues from the weak global bourses, wherein the benchmark index slipped below the 200 SMA (simple moving average) and dented market sentiment, Osho Krishan, Senior Analyst-Technical & Derivative Research, Angel One, said.

The Nifty remained under pressure throughout the week, clocking new lows of 2023 till March 16, the weekly expiry day, Krishan said.

A modest recovery was seen in the week’s last trading session on March 17, leading to a sense of resurgence. The Nifty, however, ended in the negative terrain, he added.

On the sectoral front, the Nifty PSU index fell 4.5 percent, the auto index 4 percent, the information technology index 2.3 percent and the bank index shed 2 percent.

The BSE smallcap index shed nearly 3 percent, with Swan Energy, PC Jeweller, GRM Overseas, Brightcom Group, Deep Polymers, Vikas WSP, Rushil Decor, PNB Housing Finance, Future Consumer and Jindal Drilling Industries losing 15-22 percent.

On the other hand, Jain Irrigation Systems, Moschip Technologies, Medplus Health Services, Waaree Renewable Technologies, Zen Technologies, Shiva Cement, Onward Technologies and AYM Syntex were up 10-15 percent.

“Global equities reversed their selling streak on reports of a rescue package for the beleaguered First Republic Bank, along with an aid provided to Credit Suisse from the Swiss Central Bank, which would soothe concerns over global financial stability,” said Vinod Nair, Head of Research at Geojit Financial Services.

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Easing US inflation provided confidence that the Federal Reserve would not opt for a harsh rate hike of 50 basis points (bps) and may even consider taking a break during the March meeting, he said.

“Consistently unfavourable signs in global markets are encouraging investors to turn to safe havens such as the dollar and gold, while FIIs are withdrawing funds from the domestic market in response to the Indian rupee’s depreciation. Considering the 50 bps rate hike by the ECB, all eyes will be on the US Fed and Bank of England, which are set to hold their policy meetings next week,” Nair added.

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FII selling spree

Foreign institutional investors turned net sellers this week, selling equities worth Rs 7,953.66 crore, while domestic institutional investors (DIIs) bought equities worth Rs 9,233.05 crore. FIIs and DIIs have, so far, bought shares worth Rs 6,408.19 crore and Rs 16,162.40 crore this month.

Where is Nifty50 headed?

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

We expect a short-term pullback in the market, as lower US PPI inflation and slower US retail sales data triggered hope of a lower 25 bps rate hike by the Fed next week. The market structure, however, is still weak and traders should take a cautious stance at higher levels.

Metal stocks can see some momentum after China’s central bank cuts CRR by 25bps to stimulate the economy.

Realty stocks are seeing buying interest after DLF announced record sales growth. With oil hovering at a 15-month low, cement, paints and OMCs will also be in focus.

Jatin Gedia, Technical Research Analyst, Sharekhan by BNP Paribas

We believe that the pullback rally has some more steam left and the Nifty is likely to carry on this positive momentum next week as well.

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