The Reserve Bank of India’s booster shot helped Sensex, and Nifty50 climb crucial resistance levels in the truncated week, but the real action was seen in the small and mid-cap space.
The S&P BSE Sensex rose 1.38 percent while the S&P BSE Nifty50 gained 1.7 percent for the week ended April 17 compared to 4.9 percent rally seen in the S&P BSE Smallcap index and the S&P BSE Midcap index was up 3.96 percent in the same period.
As many as 133 stocks in the S&P BSE 500 index rose 10-40 percent in a truncated week. This included names such as Deepak Fertilisers, Supreme Industries, Shree Cement, Sun Pharma, Finolex Industries, Axis Bank, PVR, Equitas Holdings, and NCC.
In the S&P BSE Smallcap index, there are more than 260 stocks that rose 10-70 percent in the week gone by that include names such as Force Motors, Rain Industries, Jindal Saw, Bajaj Consumer Care, DCB Bank, BEML, Shakti Pumps, and Andhra Bank among others.
Note: Here is a list of top 100 stocks from the S&P BSE 500 index out of 133 that rose 10-40% for the week ended 17 April
Small and mid-cap stocks have been gaining traction largely on account of stimulus measures that are being announced by the government and the RBI to cushion the economic impact of the COVID-19 outbreak.
However, experts advise caution while investing in the broader market at current levels even though they might look attractive at current levels after the recent fall.
"Buying is more event-driven in small and mid-caps at this point in time. A number of consolidated factors including the stimulus measures by the government and the RBI are impacting buying behaviour in these stocks," Umesh Mehta, Head of Research, Samco Securities told Moneycontrol.
"Investors are following the buy on dips strategy but in the process are forgetting that companies that have performed in the past are not necessarily going to emerge winners post this pandemic," he said.
Mehta further added that it is extremely essential to analyse the impact of lockdowns and restrictions in trade on businesses before buying them.
Equity benchmarks extended gains for the second week in a row amid firm global cues. The broader market outperformed the benchmark indices as Nifty mid-cap and small-cap gained 4 percent and 7 percent, respectively.
Sectorally, all major indices ended in green led by financials, Metals, Infra, Auto and Pharma.
The Nifty extended gains, on an expected line, as it formed a weekly bull candle with lower shadow indicating elevated buying support at 8,800 mark, which is 38.2 percent retracement of the most recent up leg (8,055-9,261).
During the week, Nifty hit an intra week high of 9,324, and the next possible target for the index is placed at 9,950-10,000 levels, suggest experts.
“We are, therefore, of the opinion that a sustained close above 9,500 levels would further accelerate the positive momentum thereby leading Nifty towards the psychological mark of 10,000 levels over the coming month,” Dharmesh Shah, Head – Technical, ICICI direct told Moneycontrol.
“In the process, we do not expect Nifty to breach strong support at 8,500 levels which is 80 percent retracement of last two week’s up move (8,361-9,324). Thereby we advise investors to capitalise any dip from here on towards 8,800 levels as an incremental buying opportunity, paving the way to challenge the upper band of consolidation of 9,500 in the coming week,” he said.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.