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Last Updated : Oct 12, 2019 12:47 PM IST | Source: Moneycontrol.com

Small-caps underperform amid high volatility, more than 60 stocks fell 10-50% in a week

In the S&P BSE 500 index, as many as 8 stocks fell 10-20 percent which include names like Delta Corp, Rail Vikas, Berger Paints, Bharti Airtel, Gruh Finance, Bandhan Bank, and Adani Green Energy.

Kshitij Anand @kshanand
 
 
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The Indian markets witnessed a rebound in the second half of the week and managed to close in the green for the week ended October 11, but the biggest casualty of last week was the small-cap stocks.

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The S&P BSE Sensex rose 1.2 percent while the Nifty closed 1.17 percent higher compared to 0.4 percent rise in the S&P BSE Mid-cap index, and 0.28 percent fall seen in the S&P BSE Small-cap index for the week ended October 11.

"Markets during the week saw a paradigm reversal of sentiments. The government’s all-out efforts in striking the right cords is indeed paying off whether it is in form of increase in dearness allowance to 17 percent, corporate tax cuts, interest rate reduction, timely tax refunds as well as nudging capital expenditure from PSUs have all reflected in the confidence of domestic bourses," Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote said.

However, profit-booking continues in the Small-cap stocks. As many as 64 stocks fell by 10-50 percent for the week ended October 11 which includes names like Sintex Industries, Cox & Kings, Lakshmi Vilas Bank, State Trading Corporation, Jain Irrigation System, Jaiprakash Power Ventures, DHFL, and Century Textiles, etc. among others.

 

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In the S&P BSE500 index, as many as eight stocks rose 10-20 percent which include names like Delta Corp, Rail Vikas, Berger Paints, Bharti Airtel, Gruh Finance, Bandhan Bank, and Adani Green Energy.

The coming week is likely to remain volatile as markets would react to Infosys, and Avenue Supermart results followed by microeconomic data such as IIP data as well as inflation numbers.

Markets will first react to the Infosys numbers in early trade on October 14. "The news related to the US-China trade talks will also be closely watched. We are still seeing mixed indications thus expect further consolidation in the index," Ajit Mishra Vice President, Research, Religare Broking told Moneycontrol.

"At the same time, excessive volatility on the stock-specific front would be hard to tackle. We suggest limiting naked leveraged positions and waiting for some stability," he said.

Infosys reported a 5.8 percent sequential growth in Q2 FY20 with its net profit at Rs 4,019 crore. The management, on October 11, also revised its full-year constant currency revenue growth guidance to 9-10 percent, up from 8.5-10 percent earlier.

On the micro front, IIP data India's industrial output contracted by 1.1 percent month-on-month (MoM) in August, according to the Index of Industrial Production (IIP) data released by the government on October 11.

Important results Hindustan Unilever, Wipro, SBI Life, ACC, Mindtree, Federal Bank, Cyient, L&T, PVR, ZEE entertainment, Ambuja Cements, and Reliance Industries among others.

Technical Outlook: 


Benchmark indices ended a volatile week on a buoyant note ahead US-China trade war outcome. The Nifty ended at 11,305, up 1.2 percent for the week. But, broader markets relatively underperformed the benchmarks as the Nifty midcap and smallcap lost 0.2 percent and 0.4 percent respectively.

ICICI Securities expects the Nifty to hold key support around 11,000 levels and eventually challenge the September 2019 high at 11,700 levels in the coming weeks. "The current correction and volatility present incremental buying opportunity to accumulate quality stocks as Q2FY20 earnings season kicks off," it said.

The Nifty rebounded as buying was seen at lower levels. It closed above its crucial long term moving averages such as 200-days EMA, and 200-DMA which is a positive sign for the bulls.

Technical experts feel that investors could use buy on dips strategy as long as Nifty holds above 11,100 which should act as crucial support for the index.

"Buying from lower levels kicked in, validating the "Buy on Dips" Set up for the coming days. It is also pleasant for traders to see that a retest of 50 Days MA was seen which Nifty exactly touched and bounced back," Mustafa Nadeem, CEO, Epic Research told Moneycontrol.

"Though we are seeing overhead resistance on weekly charts which is 20 MA at 11,374. With the current structure, we believe one important retest of previous supports is done and hence these lower levels of 11,100 - 11,200 should act as a base for an upside to 11,740," he said.

 

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.




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First Published on Oct 12, 2019 09:35 am
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