Over 100 small-caps make double-digit gains as broader indices scale fresh highs

Upbeat GDP numbers and better manufacturing PMI data for the first quarter of this fiscal helped the benchmark indices end a five-week losing streak, ignoring weak monsoon, rising crude oil prices and mixed global markets.

In this week, the BSE Sensex gained 0.77 percent, or 500.65 points, to end at 65,387.16, and the Nifty50 added 0.87 percent, or 169.5 points, to close at 19,435.30.

The broader indices outperformed the benchmarks with the BSE Mid-cap, BSE Small-cap and the BSE Large-cap indices gaining 2.3 percent, 3.8 percent and 1 percent, respectively.

“Indian equities posted healthy gains this week. Large indices like the BSE-30 and the NSE-50 gave weekly returns of close to 1 percent. Indian mid-cap and small-cap indices outperformed their large-cap peer. On the sectoral front, the BSE Metals and the BSE Realty indices saw weekly gains exceeding 5 percent. Other sectors that gave healthy weekly gains include BSE Commodities, BSE Auto, BSE Capital Goods and BSE Power. On the other hand, the BSE FMCG index posted negative return,” said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.

“India’s real GDP growth in Q1FY24 came in at 7.8 percent. In the near term, the market is expected to keep a close watch on impact of weak monsoon in August and rise in crude oil prices,” he added.

On the sectoral front, the BSE Metal index jumped 6 percent, BSE Realty index 5.7 percent, BSE Telecom index 4.5 percent and BSE Power and Auto indices added 3.4 percent each. On the other hand, the BSE FMCG index lost 0.5 percent.

The BSE Small-cap index surged 3.8 percent. Railtel Corporation of India, India Pesticides, Optiemus Infracom, HLV, Take Solutions, RattanIndia Power, Atul Auto, Jai Balaji Industries, Gokaldas Exports, Cerebra Integrated Technologies, Pokarna, Uflex, Coffee Day Enterprises, Skipper and Sharda Motor Industries added 25-46 percent.

On the other hand, GNA Axles, Digispice Technologies, Kuantum Papers, Waaree Renewable Technologies, Newgen Software Technologies and Electronics Mart India shed 10-46 percent.

The Foreign institutional investors (FIIs) continued to sell in the sixth consecutive week as they offloaded equities worth Rs 4,311.58 crore, while domestic institutional investors (DIIs) bought equities worth Rs 9,570.03 crore in this week. However, in this month of August, FII sold equities worth Rs 20,620.65 crore and DII bought equities worth Rs 25,016.95 crore.

Where is Nifty50 headed?

Amol Athawale, Vice President – Technical Research, Kotak Securities

On the daily and intraday charts, the Nifty formed a double bottom formation, which indicates the strong possibility of a fresh rally. In addition, a long bullish candle on daily charts also supports further uptrend from the current levels. For bulls now, 19,350 would act as a sacrosanct support zone. Above this, the index could rally till 19,575. However, below 19,350, the uptrend would be vulnerable and the index could slip till 19,275-19,220.

For Bank Nifty traders, 44,200 would be the crucial support level, and above the same it could move up till 44,700 and 45,000. On the flip side, below 44200, the index could slip to the 43,900-43,700 levels.

Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas

On the daily charts, we can observe that the Nifty has seen a sharp pullback from the 19,250 zone where the Nifty has been witnessing buying interest. The daily and the hourly momentum indicator has a triggered a positive crossover with a divergence which is a bullish sign from short-term perspective.

On the weekly charts, the Nifty has closed in the green after falling for five consecutive weeks which indicates that the index has reached a zone from where buying interest has emerged. Considering the above parameters, we change our short-term outlook on the index to positive. On the upside, we expect the Nifty to target levels of 19,650. In terms of levels, crucial support zone is placed at 19,330 – 19,300 and immediate hurdle is placed at 19,520 – 19,550.

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