44 smallcaps give double digit returns as market extends gains in third week

The market extended the gains in the third week ended April 13, despite a holiday, led by positive macro data, FII buying, however, investors remained concerned amid expectation of below normal monsoon, weak start of quarterly earnings and FOMC minutes hinted at a possible mild recession.

This week, BSE Sensex rose 598.03 points or 0.99 percent to close at 60,431, while Nifty50 rose 228.85 points or 1.3 percent to close at 17,828.

For the week, BSE Midcap, Smallcap and Largecap indices added 1 percent each.

“Despite enduring four consecutive months of decline from November 2022 to March 2023, the Indian market has sustained its rally in the new financial year, with the Sensex reaching a level almost equivalent to that at the end of 2022,” said Sunil Damania, Chief Investment Officer, MarketsMojo.

“Additionally, Foreign Institutional Investors (FIIs) have made a good comeback and have made net positive investments in the market. This rally occurred despite Skymet’s prediction of a below-average monsoon this season. With small and mid-cap stocks participating in the rally, the mood of retail investors has improved.”

“However, investors are concerned by poor commentaries from IT companies and the IT Index saw a decline of 1.5 percent this week. As the result season has begun, the market is expected to experience some level of volatility based on future outlook and numbers. We anticipate that the market will continue to be volatile for the next week,” he added.

Among sectors, Nifty Realty index rose 5.25 percent, Auto index up 3.6 percent, Metal up 3.2 percent and Bank index added 2.6 percent.

On the other hand, Nifty Information Technology index down 1.5 percent and Media index down 0.6 percent.

The BSE Small-cap index rose 1.5 percent with Vinyl Chemicals (India), Mangalam Organics, Xelpmoc Design, Aarti Surfactants, The Bombay Dyeing Co., Kopran, Neogen Chemicals, DB Realty, Tanfac Industries, Future Consumer, Vikas WSP, Black Box, Balaji Amines, Kingfa Science & Technology, Data Patterns (India) and Seamec adding 15-42 percent.

Losers included Brightcom Group, SEPC, SVP Global Textiles, KBC Global, Nucleus Software Exports, TruCap Finance, Vakrangee, PC Jeweller and EKI Energy Services.

“The Indian market displayed resilience in the early half of the week, aided by positive quarterly business updates from leading sectors and continued FII buying. The RBI’s decision to keep the policy rates unchanged, along with positive revisions to GDP and inflation forecasts, also bolstered market sentiment. Although the downward revision of FY24 inflation to 5.2% was earlier seen as slightly ambitious, the March CPI inflation rate of 5.66% lent support to the RBI’s stance. However, solid US job data raised concerns over further rate hikes by the Fed,” said Vinod Nair, Head of Research at Geojit Financial services.

“Global markets were also perturbed after the FOMC minutes hinted at a possible mild recession due to banking turmoil despite US inflation cooling to 5.0 percent. The top IT firm’s weak quarterly earnings and cautious outlook, which highlighted deferred spending and uncertainty in the BFSI segment, dampened the domestic market mood in the latter part of the week. The earnings reports, primarily from the IT and banking sectors, will influence market trends in the upcoming week,” he added.

The Foreign institutional investors (FIIs) extended the buying in the third consecutive week as they bought equities worth Rs 3355.16 crore during this week, however domestic institutional investors (DIIs) continued the profit booking in the second week, as they sold equities worth Rs 411.42 crore. In this month till now, FIIs bought equities worth Rs 4,959.72 crore and DIIs sold equities worth Rs 2,683.95 crore.

Where is Nifty50 headed?

Rajesh Bhosale, Technical Analyst at Angel One

On weekly chart, we can see a fresh buy signal in the RSI smoothened with its signal line. This indicates a continuation of up move in the near term. Having said that, one should avoid being complacent as this recent up-move has been very steep without any breather and hence, some in-between pause or mild profit booking cannot be ruled out. Hence, traders should prefer to take some money off the table at higher levels, whereas, in case of any dips, one should use it as an opportunity to add bullish bets.

With the continuous nine days winning streak, the support level continues to shift higher as we now see immediate support in the zone of 17,700 – 17,600; whereas 200-SMA around 17,500 is likely to act as a sacrosanct level. On the flip side, the next set of resistance is seen at the psychological level of 18,000 followed by the next swing high of 18,137.

Rohan Patil, Technical Analyst, SAMCO Securities:

The frontline index has given a bullish confirmation by giving a break above the previous intermediate high and neglecting the lower top lower bottom move. The momentum oscillator RSI (14) has witnessed a breakout of a three-month-long consolidation band and the oscillator has closed above its horizontal trend line with a bullish crossover.

Technically, the view remains with a bullish bias with buy-on dips to be used as a strategy, with support to be seen near 17,550 levels while resistance is now at 18,000 levels.

Ajit Mishra, VP – Technical Research, Religare Broking

Markets will react to the results of two heavyweights viz. Infosys and HDFC Bank in early trades on Monday. Indications are in favor of the prevailing tone to continue, so intermediate dips should be considered as a buying opportunity. We reiterate our preference for banking, financials and FMCG pack and recommend picking selectively from others.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.