More than 300 smallcaps lose between 10-32% as broader indices underperform

Market This Week

The broader indices continued their underperformance to the main indices, in the second consecutive week ended October 25 led by weak Q2 performance, selling across the sectors, continued FII outflow, and mixed global markets ahead of US presidential election.

This week, BSE Sensex shed 1,822.46 points or 2.24 percent to finish at 79,402.29, while the Nifty50 index fell 673.25 points or 2.70 percent to close at 24,180.80.

For the month of October, both the benchmarks shed 6 percent each.

The BSE Large-cap Index, BSE Mid-cap Index and BSE Small-cap indices fell 3.2 percent, 5.2 percent and 7.3 percent, respectively.

On the sectoral front, Nifty Media, Metal, Realty shed 7 percent each, Nifty Oil & gas index fell more than 6 percent, Nifty PSU Bank index declined nearly 6 percent and Nifty Auto index slipped more than 5 percent.

Foreign Institutional Investors (FIIs) continued pulling out funds from the Indian markets during the week, as they sold equities worth Rs 20,024.27 crore. However, it was compensated by Domestic Institutional Investors (DII) as they purchased equities worth Rs 22,914.63 crore.

In the month till now, the FIIs sold equities more than Rs 1 lakh crore, while DIIs purchased equities worth Rs 97,090.83 crore.

"Indian equity markets corrected sharply this week as FII continued with selling in Indian markets. Benchmark indices (Nifty 50 and Sensex 30) declined between 2-3% this week. The midcap and the smallcap stocks witnessed selling pressure. As a result, the BSE Midcap and the BSE Smallcap indices underperformed the larger peers and were down between 5-8% on a weekly basis," said Shrikant Chouhan, Head Equity Research, Kotak Securities.

"All the sectoral indices ended the week in the red with multiple indices seeing a weekly fall in excess of 6%. Market sentiment was also weighed down by weaker-than-expected Q2FY25 earnings and a weak commentary. The RBI MPC minutes released this week highlighted the fairly balanced risks to growth-inflation."

"Globally, geo-political development will likely keep the equity markets and prices of certain commodities volatile. In the coming weeks, key events include the US elections and the US FOMC meet. Stock specific action will continue based on Q2FY25 financial performance and management commentary," he added.

The BSE Small-cap index declined 7.3 percent with PNC Infratech, Huhtamaki India, Chennai Petroleum Corporation, KPIT Technologies, Bliss GVS Pharma, RBL Bank, Poonawalla Fincorp, Gravita India, IIFL Securities falling between 20-32 percent. On the other hand, Timex Group India, CARE Ratings, Amber Enterprises India, Deepak Fertilisers, City Union Bank added between 10-15 percent.

Where is Nifty50 headed?

Amol Athawale, VP-technical Research, Kotak Securities

We are of the view that, the current market texture is weak but oversold hence strong possibility of pullback rally from the current levels is not ruled out. For the traders now, 24100/79000 would act as a key support zone. Above the same, we could expect one technical bounce back till 24500/80300 and 100 day SMA or 24600/80600.

On the flip side, fresh selloff possible only after dismissal of 24100/79000. Below the same, market could slip till 24000-23800/78700-78300.

For Bank Nifty the 50500 would act as a key support zone. Above which, the pullback formation is likely to continue till 51200-51500. On the flip side, below 50500 it could correct till 50250-50000.

Tejas Shah, Technical Research, JM Financial & BlinkX

Technically, the evidence continues to suggest that the markets are likely to remain under pressure in the near term. However, there is a possibility of a minor pull back rally or sideways consolidation in the next 1 or 2 days after a sharp fall which was witnessed in Friday’s trading session. Support for Nifty is now seen at 24,100 and 24,000. On the higher side, immediate resistance for Nifty is at 24,450-500 levels and the next crucial resistance is at 24,700-750 levels.

Vinay Rajani, Senior Technical & Derivative Research Analyst at HDFC Securities

Nifty is currently trading below all important moving averages which indicates down trend on all time frames. However, RSI oscillator on Nifty daily chart has reached in to the oversold territory, which could result in to some pullback from the current levels.

In case of pullback, Nifty could retrace back to the levels of 24600-24650, which happens to be a neckline level of bearish head and shoulder pattern on the daily chart. Primary trend has been bearish and higher levels should be utilized to lighten long commitments. On the downside, Nifty band of 23900-24000 is likely to act as a immediate support for the Nifty.

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