More than 50 smallcaps rise between 10-41% as index remain subdued

• Benchmark indices ended the week subdued amid volatility.
• FIIs continued selling, while DIIs bought equities.
• Autos, metals, PSU banks outperformed; oil & gas, FMCG lagged.

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In line with the benchmark indices, broader markets also delivered muted returns during the volatile week, amid ongoing geopolitical tensions, rupee depreciation and rising crude oil prices.

Among the broader markets, the BSE Midcap Index and BSE Smallcap Index ended the week largely unchanged, while the BSE Largecap Index declined 0.3 percent.

Meanwhile, the benchmark indices also remained subdued, with the BSE Sensex slipping 0.04 percent and the Nifty 50 falling 0.15 percent during the week.

Foreign Institutional Investors (FIIs) were net sellers during the week, offloading equities worth Rs 29,897.67 crore, continuing their selling streak in Indian equities for the fifth consecutive week. On the other hand, Domestic Institutional Investors (DIIs) bought equities worth Rs 30,641.90 crore.

"Market sentiment remained cautious amid persistent Middle East tensions during the week, with elevated crude oil prices, and continued FII selling. Although the domestic equities saw a brief relief-led recovery on valuation comfort and short covering early in the week, the rally quickly reversed as renewed Middle East attacks pushed crude prices higher, reviving inflationary and macroeconomic concerns," said Vinod Nair, Head of Research, Geojit Investments

"Brent crude rose over the course of the week, while the rupee depreciated to fresh lows, further pressuring risk assets. However, the latter part of the week witnessed modest stabilization following indications of potential de-escalation and restraint around attacks on oil and gas infrastructure. Nevertheless, investors remained cautious and reluctant to carry risk positions into the weekend. Sectorally, autos, metals, and PSU banks outperformed, supported by bargain hunting following recent corrections. In contrast, oil & gas, FMCG, real estate, financial services underperformed due to input cost pressures, rupee weakness, and stock-specific pressures." he added.

"Looking ahead, markets are likely to remain highly sensitive to geopolitical developments, movements in crude oil prices, and currency fluctuations. Key near-term catalysts include inflation data from Japan and the UK, commentary from US Federal Reserve Chair Jerome Powell, and PMI releases across the US and India, which will be closely watched for insights into growth resilience and policy flexibility."

"While near-term volatility driven by geopolitical risks and macroeconomic headwinds may persist, the ongoing correction and valuation reset are progressively creating selective long-term opportunities for disciplined investors adopting a balanced and patient approach," Nair added further.

Sectoral performance remained mixed in this week, with Nifty Private Bank, Pharma, Healthcare, Realty, FMCG. Oil & Gas and Defence indices declining in the range of 1-2.4 percent, while Nifty Auto, Metal, PSU Bank, IT indices gained between 0.4-2 percent.

The BSE Smallcap index ended on a flat note. Aqylon Nexus, Rajesh Exports, TTK Prestige, Sadhana Nitrochem, VL E-Governance and IT Solutions, Camlin Fine Sciences, SpiceJet, Ecos India Mobility & Hospitality, Everest Industries, Hindustan Oil Exploration Company, Ramkrishna Forgings, Fino Payments Bank, Filatex Fashions, Dish TV India, Shivalik Rasayan, Astec Lifesciences, DEE Development Engineers shed between 10-22 percent. On the other hand, Websol Energy System, Valiant Organics, Bodal Chemicals, Gujarat Alkalies and Chemicals, Nitco, Olectra Greentech, Deep Industries, Shaily Engineering Plastics, Network People Services Technologies, Uttam Sugar Mills added between 20-41 percent.

Where is market headed?

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities

After a massive decline and faster downside retracement on Thursday, Nifty witnessed bounce back amidst volatility on Friday and closed the day higher by 112 points. A small thin candle was formed on the daily chart with long upper shadow. Technically, this signals a formation of doji type candle pattern. This market action indicates lack of strength in the upside bounce. Bearish pattern like lower tops and bottoms is intact on the daily chart and the Nifty is on the way down to form a new lower bottom of the pattern.

The near term trend of Nifty remains weak and present bounce back could be a sell on rise opportunity. A weakness below 22900 could open next downside target of 22500 in the near term. However, immediate resistance is placed at 23380.

Ajit Mishra – SVP, Research, Religare Broking

We maintain our cautious stance given the prevailing negative sentiment and recommend preferring hedged positions over naked trades until greater stability emerges. On the index front, the 23,400–23,600 zone is likely to act as a resistance area in case of a rebound, while 22,800 remains a critical support level.

A break below this level could lead to further downside towards the 22,500 mark, despite the oversold conditions. As most sectors continue to face pressure, participants should maintain a stock-specific approach, focusing on relatively stronger stocks for long opportunities and weaker counters for short positions.

Rupak De, Senior Technical Analyst at LKP Securities

The index remained volatile during the day as choppiness in crude oil prices rocked Indian equities. On the hourly chart, the rising Nifty faced resistance at the 21EMA and slipped lower. On the daily chart, a Bullish Harami Cross has formed, which is a bullish reversal pattern.

In the short term, the trend may improve with the potential to rise towards 23400–23600. On the lower end, 22950–23000 remains a key support zone, below which bearishness may re-emerge.

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