The market hit record highs in November. The S&P BSE Sensex rallied above 44000 to hit a record high of 44,827 for the first time in history while the Nifty50 surpassed Mount 13K to hit a record high of 13,145.
Benchmark indices posted their best monthly return since April 2020. The S&P BSE Sensex rose 11.4 percent while the Nifty50 rallied by 11.39 percent but the big action was seen in the broader market space.
The S&P BSE Midcap index rose 13.49 percent while the S&P BSE Smallcap index was up 13.3 percent in November.
There are as many as 23 stocks that rallied more than 50 percent in a month in the S&P BSE Smallcap index. Shares of DB Realty more than doubled investors’ wealth in November, up 110 percent.
Stocks that rose 50-100% in November include names like IG Petrochemicals, Videocon Industries, Jubilant Industries, DHFL, Gayatri Projects, Tanla Platforms, among others.
On a weekly basis (from Nov 20-Nov 27), the S&P BSE Sensex rose 0.6 percent while the Nifty50 rallied by about 0.85 percent while the S&P BSE Smallcap index rallied over 4 percent, and the S&P BSE Midcap index rose by nearly 3 percent in the same period.
Data suggest that most of the action was seen in the small & midcap space both from a weekly as well as monthly perspective. Experts see the continuation of the trend in the coming month as well.
“The Nifty Midcap and Smallcap indices have performed strongly in the past couple of weeks given the improving macros and positive developments around the COVID-19 vaccines. We expect this trend to continue fuelled by fund inflows and optimism around improving fundamentals,” Umesh Mehta, Head of Research, Samco Group told Moneycontrol.
“Since our index has become extremely polarized a shift in the money is justified. Broader markets had been undervalued for the past couple of years and with the rise in benchmark indices, the broader indices too will prosper. Investors can look to accumulate quality midcaps at the current levels,” he said.
Better than expected GDP data for the quarter ended September will fuel optimism on D-Street, but technical India has slipped into a recession.
The Indian economy, which witnessed a contraction of 23.9 percent in the June quarter, shrank 7.5 in the September quarter, according to official data released by the National Statistical Office on November 27.“The Q2 GDP numbers came in as a big positive surprise. Though agriculture and services numbers came in a little below expectations, manufacturing growth has come in much stronger than expected,” Dhiraj Relli, MD & CEO, HDFC Securities said.
“This will entail revising downward the full-year GDP contraction forecasts. Equity markets could open higher on Tuesday reflecting the positivity of the Q2 GDP numbers,” he said.
Although Nifty50 witnessed mild profit booking at higher levels on the last trading day of November. The market will remain shut on Monday on account of a public holiday.
Investors can look at booking some profits in the first week of December which would also be in focus due to the RBI monetary policy meeting.
“Retail investors can turn a bit cautious, in the short-term, post the solid performance from the COVID low and heavy gains in this month. Nifty50 is up by more than 10% while Midcaps are by 15%, during the month,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.
“They should start at least to consider booking profits in stocks where returns are decent. After the huge inflows, FIIs could take a breather and check-on the next phase of policies in the US and Europe for 2021,” he said.
The Nifty50 which crossed 13,000 in November failed to hold on to the gains. The index closed lower by 18 points at 12,968 on Friday.
Two factors pushed the Nifty50 beyond 13000 – a) short-covering ahead of November 2020 F&O expiry, and b) rebalancing of MSCI portfolios, helped the Indian market to recover sharply from lower levels.
Moreover, FIIs witnessed stellar buying figures and bought over Rs 57,600 crore, whereas DIIs sold nearly Rs 43,350 crore in the last four days, data showed.
Technically, post strong uptrend rally the Nifty has formed a Doji candlestick pattern which clearly indicates indecisiveness between bulls and bears. But, the medium-term trend is still positive, suggest experts.
“The medium-term texture of the benchmark index is still bullish and likely to continue in the short run. The Doji candlestick and intra-day charts formation indicate red flags near the 13000 levels,” Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities told Moneycontrol.
“Hence, a strong possibility of quick intra-day price correction is not ruled out in the near term. For the next few trading sessions, 12810 should be the sacrosanct level for the trend following traders. If it sustains above the same then uptrend texture is likely to continue up to 13050,” he said.
Chouhan further added that any further upside could lift the index up to 13200 levels. On the flip side, dismissal of 12810 could trigger correction up to 12700-12650 levels.
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