There are as many as 35 stocks in the BSE Small-cap index that rose 10-60 percent which include names like HSIL, Rushil Décor, Chennai Petro, Kitex Garments, Patel Engineering, Jet Airways, and Ujaas Energy.
The Indian market witnessed a rollercoaster ride this week when the Nifty touched an intraday low of 11,929 before bouncing back to hit a fresh record high of 12,311 on January 10.
The mood quickly changed from fear to greed as tensions between Iran and the United States eased, crude oil corrected and is now trading around $65/bbl, and due to hopes of strong policy reforms from the government in Budget 2020.
"The barometer of greed and fear moved Mr Market dramatically this week on the back of war rhetoric, which later receded quickly. Nonetheless, traders and investors, including foreign portfolio investors (FPIs) were jittery and paused buying for the week," Jimeet Modi, Founder and CEO, SAMCO Securities & StockNote told Moneycontrol.
"Since Budget 2020 is round the corner, small and mid-cap stocks are expected to see hyperactivity on hopes and expectations. Agriculture and Housing will see action and the Budget could provide some relief to these stressed sectors," Modi added.
For the week, the Sensex closed with gains of over 0.33 percent while the Nifty closed with gains of 0.25 percent for the week ended January 10.
In the broader market space, the S&P BSE Small-cap index rose 1.1 percent while the S&P BSE Mid-cap index closed 0.3 percent higher in the same period.
There are as many as 35 stocks in the S&P BSE Small-cap index that rose 10-60 percent which include names such as HSIL, Rushil Décor, Chennai Petro, Kitex Garments, Patel Engineering, Jet Airways, and Ujaas Energy.
What to watch out for in the coming week:
Markets first reacted to IT major Infosys' results in early trade on January 10.
Infosys, on January 10, stated that its Audit Committee found no evidence of financial impropriety or executive misconduct. The company's Q3 profit jumped 11 percent and it raised FY20 revenue guidance to 10-10.5 percent.
On the macro front, investors will react to the industrial production data for November. In the coming week, CPI, and WPI data will be important. The consensus is showing inflation is likely to spike further to 6.7 percent in December due to oil prices and vegetable prices.
"The geopolitical tension seems to have subsided, however, any escalation would be actively tracked by the market participants. Further, development of the US-China trade deal is also likely to take centre stage in the coming week," Ajit Mishra, VP – Research, Religare Broking told Moneycontrol.
"On the domestic front, key economic data such as IIP, CPI and WPI would hold importance and could potentially affect the Reserve Bank's decision making for the policy in February. Further, stock-specific volatility is likely to increase as a number of front liners would announce their quarterly results," Mishra added.Crucial earnings to watch in the coming week include:
January 11 - Avenue Supermarts
January 13 - Delta Corporation
January 14 - Wipro, IndusInd Bank, MindTree and Bandhan Bank
January 15 - L&T Infotech, Den Networks
January 16 - Rallis India and Tata Metaliks
January 17 - Reliance Industries, HCL Tech, ICICI Lombard and L&T Finance Holding among others
Benchmark indices concluded the highly volatile week on a flat note, as the Nifty managed to hold 12,000 mark and ended the week at 12,257 up by 0.25 percent while absorbing host of negative news.
The broader markets witnessed outperformance as the Nifty mid-cap and small-cap indices closed with healthy gains of 0.5 percent and 1.5 percent, respectively.
Experts are of the view that small and mid-caps are likely to outperform, and the next target for the Nifty is placed around 12,800 levels.
"The price action formed a small bull candle with a long lower shadow, as despite escalating geopolitical tension elevated buying demand emerged from 80 percent retracement of mid-December rally (11,832 – 12,294), at 11,925, indicating inherent market strength," said Dharmesh Shah, Head – Technical at ICICI direct.
"In line with our view, the Nifty mid-cap and small-cap indices relatively outperformed as both formed a higher base at 200 SMA and closed at six-month highs, indicating rejuvenated buying demand in the broader market," Shah added.
Shah further said that the Nifty entirely retraced its preceding 11 sessions decline (12,294 – 11,930) in just three sessions. Therefore any breather from here on should be capitalised as incremental buying opportunity amid Q3FY20 result season. Our revised target is 12,800.
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