In a week of smart recovery, the Indian equity market saw 31 small-cap stocks romping home with 10-54 percent gains, outsmarting a 0.3 percent drop in the Smallcap index.
After a weak start, the market settled with a little change from the previous week on December 24 amid volatility triggered by the raging Omicron infections. The BSE Sensex declined 112.57 points (0.19 percent) to finish at 57,124.31, while the Nifty50 was up 18.55 points (0.10 percent) to close at 17,003.75 levels.
Among sectors, BSE Information Technology index rose 2.7 percent and FMCG and Healthcare indices climbed 1 percent each. However, BSE Oil & Gas, Power and Bankex indices lost over 1 percent each.
Broader indices ended marginally lower with the BSE Midcap index shedding 0.75 percent and Smallcap index down 0.3 percent.
The 31 smallcap stocks bright in the green included PTL Enterprises, Shareindia, Urja Global, Medicamen Biotech, Steel Exchange India, Everest Kanto Cylinder, Prozone Intu Properties and Mahanagar Telephone Nigam.
More than 13 stocks, however, went 10-20 percent into the red. These include Paisalo Digital, Suvidhaa Infoserve, Tata Teleservices (Maharashtra), SVP Global Ventures, Best Agrolife, Barbeque Nation Hospitality, GTL Infrastructure, Rattanindia Enterprises, TeamLease Services, Precision Camshafts, Venus Remedies and CSB Bank.
“The Nifty, in the week gone by, found support near the junction of the 40 WEMA and the weekly lower Bollinger Band and witnessed a decent recovery. In the last session of the week, however, it saw some profit-booking,” said Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas.
The Nifty opened gap-up on December 24 only to face selling pressure at a higher level. It tested the hourly upper Bollinger Band and the 20 DMA, which attracted a fresh round of selling. As a result, the index has formed a bearish outside bar along with an Engulfing bear candle on the daily chart.
“Friday’s high of 17,155 becomes a crucial resistance. Structurally, the recent bounce looks matured at 17,155 and the Nifty can slide down towards its daily lower Bollinger Band, which is near 16,700. Overall, short-term consolidation is expected in the range of 17,155-16,700,” said Ratnaparkhi.
The BSE Midcap index declined 0.75 percent with losers like Shriram Transport Finance Corporation, Indian Hotels Company AU Small Finance Bank, Oil India, Oracle Financial Services Software, Bharat Heavy Electricals and Federal Bank. However, gainers were Gland Pharma, JSW Energy and Godrej Industries.
The BSE 500 index ended flat with Suzlon Energy, Minda Industries, Vakrangee, MMTC, KPIT Technologies, Esab India, Century Textiles and Radico Khaitan up 10-19 percent, while Tata Teleservices (Maharashtra), TeamLease Services and CSB Bank down 10-14 percent.
“Markets started the week with correction amid concerns of rising Omicron variant cases and increasing hawkishness from global central banks. In line with global markets, the domestic markets recovered some losses during the week. BSE Sensex and Nifty 50 ended the week almost flat,” Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
Defensive sectors saw interest from the market participants. BSE IT, BSE FMCG, and BSE Healthcare index gave positive returns. On the other hand, BSE Bankex and BSE Oil & Gas index witnessed selling pressure.
“While the US 10-year treasury yield remained broadly stable, oil prices have again started to move higher. So far this month, FII continues to be a net seller in the Indian market. Apart from inflation and global central bank announcements, global and domestic markets will continue to keep track of the Omicron variant spread,” Chouhan said.
Where is Nifty50 headed?
Prashant Tapse, Vice-President (Research), Mehta Equities
Technically, the 17,159 mark retains its tag of a key hurdle. Aggressive buying is advised only above the 17,159 mark.
Alternatively, expect a waterfall of selling below the Nifty 16,663 mark with aggressive downside risk at the 15,907 mark.
Yesha Shah, Head of Equity Research, Samco Securities
Markets will continue to see volatility and whipsaw-like movements as they respond to Omicron-related developments and the monthly expiry. The week may see sectoral rotation, with beaten-down industries gaining traction. Because the underlying tone in realty and auto is optimistic, a purchase on dips approach can be used.
IT is gaining momentum and trading at all-time highs, aided by Accenture’s stellar performance. Banks on the other hand, remain weak and are unlikely to see significant buying until the end of the year.
Investors can further examine the monthly expiry rollover data to capitalise on sectoral rotation and identify if the Santa Claus Rally will occur.
Ajit Mishra, VP - Research, Religare Broking
Markets are closely eyeing the COVID situation and any positive news could only help the index to make any sustainable up move, else volatility will continue.
We’re seeing a mixed trend across sectors, so traders should focus on IT, select FMCG, pharma for long trades, while the banking pack may continue to trade subdued.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.