Over 100 smallcaps jump between 10-32% in the week as market gains 4%

Indian equity markets settled on a positive note for the week ended July 22, supported by healthy quarterly earnings, good monsoon, buying across sectors, positive global cues, FIIs turning buyers after a long time and falling crude oil prices. However, market participants ignored the falling rupee and interest rates hike by European Central Bank (ECB) for the first time in more than a decade.

During the week, BSE Sensex rose 2,311.45 points (4.29 percent) to end at 56,072.23, while the Nifty 50 gained 670.3 points (4.17 percent) to close at 16,719.5 levels. In July so far, both Sensex and Nifty 50 have advanced close to 6 percent each.

Among sectoral indices on the NSE, Nifty PSU Bank rose 7.7 percent, Nifty IT index added 6.3 percent, Nifty Bank rose 6 percent and Nifty Metal index gained 5.4 percent. Among broader indices - Midcap, Small-cap and Large-cap indices added 3.5-4 percent.

"Nifty closed the week with a long candle and it is a good quality green candle coming off a major support. Nifty has moved above its 20 week SMA and MACD has moved above its trigger line. This is a major buy signal on the weekly charts," said Manish Shah, Independent Technical Analyst.

"On the daily, we see a slow stuttering rally in last 2 days. Nifty is extended far away from moving averages and the current move is extended. Also Nifty is around its resistance zone of 16800-16850."

"Nifty is in a buy mode on the weekly and extended on daily. There could be some sideways movement and there could be a short-term corrective decline on the horizon. Support for Nifty is at 16500. Any declines in Nifty will take a halt between 16500-16550. If Nifty holds and moves above 16600 there should be more upside to 16700-16750 going into the last week of July Expiry," Shah added.

During the last week, foreign institutional investors (FIIs) remained net buyers for most of the week as they bought equities worth of Rs 4,037.29 crore while domestic institutional investors (DIIs) bought shares worth of Rs 940.47 crore.

However, this month so far FIIs have sold equities worth of Rs 6,421.84 crore and DIIs have bought shares worth of Rs 8,307.51.

In the week gone by, more than 100 smallcap stocks rose between 10-32 percent including PTC Industries, Navkar Corporation, Sandur Manganese and Iron Ores, Quick Heal Technologies, Brightcom Group, Igarashi Motors, Aegis Logistics, Omaxe, Lasa Supergenerics, Urja Global, Repco Home Finance, Anjani Portland Cement, Syncom Formulations, AGI Greenpac, Anant Raj and Happiest Minds Technologies.

On the other hand, losers included Yash Pakka, Future Retail, Hitachi Energy India, Orient Bell, Future Enterprises, TTK Healthcare and Everest Kanto Cylinder.

"Falling crude oil prices and rebound in FII inflows into the domestic market helped benchmark Sensex to close above the psychological level of 56000. The fear of aggressive rate hikes by both the US Fed and RBI seems to be moderating, which is giving investors some room to lap up stocks of companies with good fundamentals," said Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities.

"During the week, the Nifty successfully cleared the short term resistance of 16300 and also cleared the 100-day SMA. For traders, 16800 and 16950 would act as an immediate resistance zone, while 16500-16350 could be the key support levels," he added.

Leading midcap gainers included - Shriram Transport Finance Corporation, Aditya Birla Capital, RBL Bank, Clean Science & Technology, Canara Bank, Honeywell Automation, Bharat Forge and Steel Authority of India.

The BSE 500 index rose nearly 4 percent supported by - Brightcom Group, Aegis Logistics, Happiest Minds Technologies, Gujarat State Fertilizers & Chemicals, Laxmi Organic Industries, Great Eastern Shipping Company, Vardhman Textiles, Persistent Systems and IndusInd Bank.

"The Nifty has seen strong traction in this week. The 20 DMA acted as a springboard near 15900 from where the index has taken the current leap. The hourly chart shows that the Nifty had taken support near lower end of a rising channel in the last week & thereon it has moved up towards the upper end," said Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas.

"For the last three sessions, the index is hovering near this upper channel line, which is inching higher as it is an upward sloping line. So the benchmark index is now trading close to its short term target of 16800. In the case, Nifty overshoots 16800 then it can stretch towards 17000."

"On the flip side, breach of 16600 can trigger a short term dip towards 16360. So 16600 can be considered as a SAR (Stop And Reverse) level for the long position," he added.

Where is Nifty50 headed?

Apurva Sheth, Head of Market Perspectives, Samco Securities:

The short-term trend remains positive based on other market indicators such as breadth and sentiment, we believe the Nifty will rise to 17,400. The immediate support and resistance levels are presently at 16,350 and 16,830. A break below 16,150 will nullify the bullish outlook.

The forthcoming week will be action-packed with activities. The FOMC meeting and press conference will take centre stage. While the rate hike is anticipated to be aggressive, market participants will attempt to interpret between the lines to assess the economy's route. The Fed would attempt to keep inflation in check without harming the labour market.

Besides, the release of the United States' QoQ GDP figures would have an impact on market sentiment. In Indian markets one can expect some
volatility as we approach the monthly expiry.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services

On Monday, domestic equities will react to results from several index heavyweights (with more than 30% of Nifty weight) which would announce their numbers over the weekend. On the global front, US Fed meeting and US Q2 GDP data would be key events to watch out for. FII’s turning positive after a very long time, along with strong results have kept the momentum strong for the week.

Nifty has closed above its key resistance levels and now is set for an up-move towards 17,000. India VIX has also cooled down by ~20% to 16.65 levels in last one month indicating decline in Volatility and supporting overall bullish sentiments.

Ajit Mishra, VP - Research, Religare Broking

Markets will first react to the results of heavyweights like Reliance, ICICI Bank, Infosys and Kotak Bank in early trades on Monday. Besides, the development on the global front over the weekend will remain on the radar.

We recommend continuing with a positive yet cautious stance and focusing more on identifying stocks amid the rotational buying.

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