It was a volatile week for Indian market but bulls managed to take control. After falling 3 percent in the beginning of the week on the new strain of COVID-19, both Sensex and Nifty recouped losses and closed flat for the week ended December 24.
The Nifty50 broke the 7-week winning run and closed marginally lower for the week ended December 24 and as we head towards the last week of the year 2020, experts advise caution and to remain stock specific.
The S&P BSE Sensex closed flat but with a positive bias while the Nifty50 fell 0.08 percent for the week ended December 24 while the S&P BSE Mid-cap index fell 0.7 percent, and the S&P BSE Small-cap index was down 0.53 percent in the same period.
There are as many as 14 stocks that outperformed in the S&P BSE 500 index in the week gone which was a holiday-shortened week. These include eClerx Services, Vedanta, Suzlon Energy, Jubilant Life Sciences, and Birlasoft Ltd.
Liquidity continues to move into emerging markets including India but the quantum of money has slowed down which could be because of the holiday season. Experts advise investors to remain cautious and be stock specific.
On a net basis, FIIs have been buyers in Indian equities during the month of December to the tune of USD7.5Bn even after lifetime high flows witnessed in November 2020, said a Kotak report.
“The flow from the foreign institutions has slowed during the week that bought equities to the tune of Rs 1300 crore till Thursday, as compared to Rs 11600 crore (approximately) of investments in the previous week,” Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities told Moneycontrol.
“However, it could be due to shorter week and ahead of the eve of Christmas. In the coming week, traders are strictly advised to be stock specific,” he said.
Chouhan further added that traders need to be extra cautious, as the market has entered the zone of volatility. “It would keep the market swinging between the broader range of 13900 and 13400 levels. The break of the trading range would stabilize the market and would start trending in that direction,” he said.
What should investors do with Small & Midcaps?
The S&P BSE Midcap & the S&P BSE Smallcap index underperformed the benchmark indices and closed in the red for the week ended December 24.
Experts are of the view that it is routine profit-taking and investors should not worry if they have placed their bets in quality stocks.
“Small and midcap indices may have witnessed some profit booking in the week gone by, but for the longer term, we expect them to do well. Investors should stick to high quality small and midcaps that can withstand any corrections going forward,” Umesh Mehta, Head of Research, Samco Group told Moneycontrol.“Now would be a good time to exit the retail-driven, low-quality stocks. Buy on correction in a bull market would be a good approach to increase mid and small-cap quality counters while exiting expensive low-quality stocks at highs,” he said.
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