Over 100 small-cap stocks jump up to 45% as broader indices' rally enters third week

Among sectors, Nifty Realty, Nifty Infra, Nifty Energy, and Nifty Oil & Gas gained between 3 and 5 percent.

• Sensex and Nifty rose for the third week, driven by FII-DII inflows and trade deal.
• Realty, Infra, Energy, Oil & Gas up; IT and Defence down
• Market may consolidate with positive bias if Nifty stays above 25,400

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Broader indices extended their gains for a third consecutive week, supported by positive cues such as the announcement of a US-India trade agreement, sustained FII–DII inflows, and an in-line RBI policy outcome.

During the week, the BSE Sensex rose 1,310.62 points, or 1.59 percent, to close at 83,580.40, while the Nifty50 gained 373.05 points, or 1.47 percent, to settle at 25,693.70.

Foreign Institutional Investors (FIIs) turned net buyers this week, purchasing equities worth ₹2,645.53 crore, while Domestic Institutional Investors (DIIs) continued to lend support to the market with net purchases of ₹2,892.14 crore.

Among sectors, Nifty Realty, Nifty Infra, Nifty Energy, and Nifty Oil & Gas gained between 3 and 5 percent. However, the Nifty IT index shed 6.3 percent, the Nifty Defence index fell 5.2 percent, and the Nifty PSU Bank index declined 1.6 percent.

"The domestic equity market witnessed notable volatility through the week, influenced by a series of macro events, policy developments, and global risk factors. While the Union Budget did not materially shift market sentiment, the announcement of a higher Securities STT on F&O trades alongside an expanded government borrowing program triggered a brief knee-jerk reaction across indices," said Vinod Nair, Head of Research, Geojit Investments.

"On the global front, a risk-off mood, combined with a strong US dollar and hawkish expectations surrounding the incoming Fed Chair, exerted significant pressure on precious metals."

"Domestically, markets found partial relief after India and the US reached a trade agreement with an 18% tariff structure, which redirected investor interest toward equities and supported a recovery from the immediate post Budget decline. However, the rebound remained capped by persistent weakness in IT stocks, driven by concerns over moderating demand for traditional outsourcing services following Anthropic’s introduction of next-generation AI-powered automation tools. Investor attention also shifted to the finer details of the trade agreement, prompting a phase of short-term consolidation as markets awaited clearer insights."

"Adding to the supportive backdrop, the RBI’s upward revision of GDP forecasts, combined with a steady inflation outlook, reinforced confidence in the medium term domestic economic trajectory. Despite these positives, sentiment in the near term is expected to remain cautious due to Q3 earnings that broadly trailed expectations, as well as rising crude oil prices amid escalating US-Iran tensions," he added.

The BSE Smallcap index gained 1.2 percent during the week, with stocks such as VTM, Gokaldas Exports, Garware Hi-Tech Films, Faze Three, United Foodbrands, Pokarna, Nelcast, Kabra Extrusion Technik, Avanti Feeds, ADF Foods Industries, Indo Count Industries, Sterlite Technologies, Sindhu Trade Links, GNA Axles, Quality Power Electrical Equipments, Steelcast, Kitex Garments, Sigachi Industries, Suven Life Sciences, Sri Adhikari Brothers Television, and Avalon Technologies rallying over 20 percent each.

On the other hand, Arisinfra Solutions, IRIS RegTech Solutions, Websol Energy System, Indo Farm Equipment, Intellect Design Arena, Kamat Hotels (India), Hindustan Copper, ASM Technologies, Transindia Real Estate, CarTrade Tech, MOIL, Garden Reach Shipbuilders & Engineers, Zuari Agro Chemicals, and Zydus Wellness declined between 13 and 23 percent.

Where is the market headed?

Ajit Mishra – SVP, Research, Religare Broking

We expect the consolidation to continue with a positive bias as long as the Nifty holds above the 25,400 level. However, trading remains challenging due to sharp intraday swings amid mixed global signals.

In the current environment, we reiterate a stock-specific approach based on relative strength, with preference for banking and energy stocks on dips while being selective in other sectors. It is advisable to avoid the IT pack for now and wait for signs of stability before initiating fresh positions.

Amol Athawale, VP Technical Research, Kotak Securities

In the last week, the benchmark indices witnessed a sharp bounce back. The Nifty ended 3.40 percent higher, while the Sensex was up over 2,850 points. Among sectors, the Capital Market and Reality indices outperformed. The Capital Market index was up by 7.45 percent, and the Reality index rallied by 7.70 percent, whereas the IT index lost the most, shedding over 7 percent.

During the week, the market took support near the 200-day SMA (Simple Moving Average) and bounced back sharply. However, it also registered profit booking at higher levels. Technically, on weekly charts, it has formed a bullish candle and is currently trading comfortably above the 20-day SMA, which is largely positive.

We are of the view that the market has completed one leg of correction, and for short-term traders, 25,500/83,000 and 25,350/82,500 would act as crucial support zones. If the market succeeds in trading above these levels, it could bounce back to 25,800/83,800. A successful breakout of 25,800/83,800 could push the market up to 26,000-26,050/84,500-84,700. On the flip side, a decline below 25,350/82,500 would make the uptrend vulnerable.

For Bank Nifty, the 50 and 20-day SMAs or 59,500 would be key support zones. Above these levels, it could retest 60,500 and 61,000. On the flip side, below 59,500, sentiment could change.

Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities

Going ahead, the immediate resistance for Nifty is placed in the 25,750–25,800 zone. A decisive breakout and a strong follow through above this zone could result in Nifty extending its pullback towards 26,000, followed by 26,200 in the short term. On the downside, the zone of 25,550–25,500 is likely to act as an immediate support.

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