Nifty above 10,200 levels; nearly 200 small-cap stocks rose 10-60% in a week

What a week for Indian markets! Indian markets managed to reclaim crucial resistance levels for the week ended June 18 supported by buying in top index heavyweights such as Reliance Industries, Bajaj Finance, Maruti Suzuki, etc.

Indian market managed to climb all wall of worries in the week gone by be it rise in COVID-related cases, global rating action or border standoff between India and China. Analysts attribute the rise to short covering in the key benchmark names as hope takes center stage.

“Markets spearheaded higher in spite of all the pessimism surrounding economic growth prospects – India-China border tussle, India Inc.’s weak quarterly performance as well as slow demand revival in the real economy,” Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote told Moneycontrol.

“‘Hope’ the single most emotion is rallying markets higher on the pretext that things will normalise in the next three to six months. At the same time, management commentary after quarterly results, in general, suggests that Q1FY21 will be washout quarter,” he said.

The S&P BSE Sensex rallied 2.8 percent while the Nifty50 rose 2.7 percent for the week ended June 19 compared to 1.6 percent gain seen in the S&P BSE Mid-cap index, and 3.6 percent rally seen in the S&P BSE Small-cap index – outperforming benchmark indices in the same period.

In the S&P BSE Small-cap index, as many as 194 stocks which rallied 10-60 percent in the same period. Stocks that gave double-digit returns include names like Birla Corp, Suven Life, Trent, Dhanuka Agritech, Mirza International, DCB Bank, LT Foods, Skipper, Usha Martin, Dhanlakxmi Bank, OM Metals, and Nectar Lifesciences, etc. among others.

Here is a list of top 13 stocks out of 194 that have risen more than 30%

"The mid-cap and small-cap indices have outperformed to gain by 9.7 percent and 14.3 percent respectively compared to NIFTY50 to gain by 6.9 percent MTD. Mid-caps and Small-caps are seeing a valuation catch up as smart allocation of money by funds and high net worth clients is investing in regular phases of corrective markets," Vikas Jain, Senior Research Analyst at Reliance Securities told Moneycontrol.

"The global markets are also too supportive and the results season has not witnessed any major negative surprise and trading below the average valuations provides a lot of comforts," he said.

Technical View:

The Nifty carried with positive momentum for the second consecutive session in a row and headed towards 10,250 zones. It continued to make higher highs on an hourly scale as the day progressed and concluded the session near to its day’s high.

The index has been moving in a rising channel on a daily scale by connecting swing lows of 7,511, 9,004, 9,544 and 9,845 marks, and recently it has turned from its support zones of 50 DEMA.

Experts are of the view that if Nifty close above 10,180 levels then the upmove could extend towards 10,333-10,500 levels.

“We witnessed follow up buying post a breakout from a Triangle pattern on an intraday scale which indicates that momentum may continue. RSI also turned northwards and gave positive crossover with its average, which has a bullish implication,” Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited told Moneycontrol.

“Now, it has to continue to hold above 10,180 zones to extend its move towards 10,333 then 10,500 zone, while support is now shifting higher to 10,040 and 10,000 levels,” he said.

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