Smallcap index outperforms benchmarks despite 10-22% drop in several stocks

Market Today

Broader indices remained under pressure for the third consecutive week; however, mid- and small-cap stocks relatively outperformed the benchmark indices amid weak global cues. The sentiment was weighed down by escalating US-Iran tensions, which pushed crude oil prices above $100 per barrel, along with persistent FII selling.

During the week, the BSE Sensex plunged 5.51 percent, or 4,354.98 points, to close at 74,563.92, while the Nifty50 declined 1,299.35 points, or 5.31 percent, to end at 23,151.10.

Among broader indices, BSE Largecap, Midcap, and Smallcap indices shed 5 percent, 4.5 percent, and 3.6 percent, respectively.

All the sectoral indices ended in the red, led by sharp losses in auto and banking stocks. Nifty Auto plunged 10.6%, Nifty PSU Bank fell 7.2%, Nifty Defence and Nifty Private Bank dropped 7% each, while Nifty Metal declined 6%.

"In the last week, the benchmark indices corrected sharply. The Nifty ended down by 5.20 percent, while the Sensex declined by over 4,300 points. Among sectors, almost all major sectoral indices witnessed selling pressure at higher levels, but the Auto index lost the most, shedding over 10.50 percent. During the week, the market breached the crucial support levels of 24,000/79,000, and post-breakdown, selling pressure intensified," said Amol Athawale, VP Technical Research, Kotak Securities.

"Technically, on daily charts, the market has formed lower highs and lower lows, and on weekly charts, it formed a long bearish candle, which is largely negative. We believe that as long as the market is trading below 23,400/75,000, a weak formation is likely to continue. On the downside, the market could continue its correction wave until 22,800/73,600. Further downward movement may also continue, potentially dragging the index to 22,600/73,000. On the other side, above 23,400/75,000, the pullback move could extend until 23,600-23,800/75,600-76,100."

"For Bank Nifty, it corrected nearly 7 percent this week. In the near future, 54,500 will be the key level to watch. Below this level, it could slip to 53,000-52,500. Conversely, above 54,500, the pullback could extend to 55,500-55,800," he added.

Foreign Institutional Investors (FIIs) extended their selling for the fourth consecutive week, offloading equities worth Rs 35,052.03 crore, while Domestic Institutional Investors (DIIs) remained net buyers with purchases worth Rs 37,739.78 crore.

The BSE Smallcap index shed 3.6 percent during the week, with Aqylon Nexus, Silver Touch Technologies, SEPC, InfoBeans Technologies, Amber Enterprises India, PG Electroplast, Yasho Industries, Sapphire Foods India, Capacite Infraprojects, Sunteck Realty, Rain Industries, Network People Services Technologies, Dynamatic Technologies, and Precision Wires India fell by up to 22%, while Confidence Petroleum, Chemplast Sanmar, Jindal Poly Films, Happiest Minds Technologies, Apollo Pipes, Liberty Shoes, TTK Prestige, and VTM gained between 15% and 22%.

Where is the market headed?

Rupak De, Senior Technical Analyst at LKP Securities

Nifty continued to fall as the sentiment has not improved so far. The index continued to deviate further away from the 200DMA as the selling intensified. The RSI has entered the oversold zone. Though the trend remains weak, in times of extreme weakness, the market might continue to fall, keeping the RSI in a deep oversold zone.

In the short term, the trend might continue to remain weak, with any rise being sold into. On the lower end, the index might fall towards 23000/22800, while on the higher end, resistance is placed at 23400.

Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities

Going ahead, the immediate support for Nifty is placed in the 23000-22950 zone. Any sustainable move below this zone could result in Nifty extending its weakness towards 22750, followed by 22500 in the short term. On the upside, the zone of 23450–23500 zone is likely to act as a strong resistance.

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities

The sharp downside momentum continued in the market for the third consecutive session on Friday, amidst the Middle East conflict and rising International crude oil prices, and Nifty closed the day lower by 488 points. After opening on a weak note, the market continued to slide lower for the better part of the session. Intraday upside recoveries in between have been used as a sell on rise opportunity.

A long bear candle has been formed on the daily chart, which made a new swing low of 23112 levels on Friday. Nifty has entered the support of the previous opening upside gap area of April 15, 2025, around 23,200-22,900 levels. Though Nifty is placed near the supports, there is still no confirmation of any bottom reversal pattern forming. This is not a good sign.

The underlying trend of the market is sharply down. There is a higher possibility of Nifty showing a minor pullback from near the lows of around 22900 by next week. If it fails to do so, then one may expect more weakness down to 22500-22000 levels in the near term. Immediate resistance is placed at 23500.

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