Small-caps index extend gains in fourth week; 53 stocks give double-digit returns

Market This Week

Broader indices outperform the main indices, with the small-cap index rising 2 percent, extending the gaining streak in the fourth week as investors welcome the RBI's growth support measures with a cut in repo rate by 50 basis points and CRR by 100 basis points.

BSE Mid and Small-cap indices added 2 percent each, while the Large-Cap index rose 1 percent, snapping a two-week losing streak.

For the week, the BSE Sensex index added 737.98 points or 0.9 percent to finish at 82,188.99, and Nifty50 jumped 252.35 points or 1.01 percent to end at 25,003.05.

The Foreign Institutional Investors (FIIs) remained net sellers in the third consecutive week as they sold equities worth Rs 3,565.88 crore.

On the other hand, Domestic Institutional Investors (DII) continued their buying in the seventh consecutive week as they bought equities worth Rs 25,513.43 crore.

Among sectors, the Nifty Realty index surged 9.5 percent, the Nifty Metal index up 2.3 percent, the Nifty PSU Bank index rose nearly 2 percent, and the Nifty Auto index gained 1.4 percent.

"After initiating the week with consolidation, the domestic market exhibited resilience amidst concerns over tariff wars and geopolitical escalations. Bolstered by supportive macro indicators such as strong Q4 GDP, GST collection, and a favourable monsoon, investors focused on domestically oriented and interest-sensitive sectors such as Financials, Real Estate, Retail and FMCG, which saw strength, supported by strong institutional inflows," said Vinod Nair, Head of Research, Geojit Investments.

"Profit booking was visible during the week on account of the ongoing global uncertainty. Mid and small caps generally outperformed large caps, driven by better earnings and valuations. A mildly positive bias emerged later from strong US job data and expectations of easing US-China trade tensions. Benchmark indices attempted recovery as FIIs turned net buyers, encouraged by strong domestic economic indicators amidst weakening dollar and US bond yields, fostering a ‘buy-on-dip' strategy."

"The week concluded with an icing on the cake as the RBI delivered a larger-than-expected 50 bps repo rate cut along with a tremendous liquidity boost through a 100 bps cut in CRR while shifting to a 'neutral' stance. This substantial monetary stimulus caused indices to rally sharply and recover the previous week’s losses," Nair added.

"While China's rare earth restrictions pose long-term risks and investors await the inflation print in the US, the aggressive RBI rate cut, backed by cooling inflation and a steady GDP outlook, is likely to support investor confidence amidst the ongoing global uncertainties," he said further.

The BSE Small-cap index jumped 2 percent with Quick Heal Technologies, Bharat Wire Ropes, AstraZeneca Pharma, Cochin Shipyard, Permanent Magnets, Astec Lifesciences, and Shilchar Technologies rising 20-28 percent.

On the other hand, MMTC, Shaily Engineering Plastics, PRAVEG, Avanti Feeds, Sun Pharma Advanced Research Company, Sundaram-Clayton, and Niva Bupa Health Insurance Company fell between 10-14 percent.

Where is Nifty50 headed?

Rupak De, Senior Technical Analyst at LKP Securities

The stock index has moved up sharply following a bazooka policy move by the RBI. It closed above the 25,000 mark after several sessions, indicating a surge in optimism among market participants. Typically, a rally followed by consolidation often results in an upward breakout, and this time too, we expect Nifty to break out above the recent consolidation range.

On the higher side, resistance is placed at 25,150. A move above this level - or even a sustained close above 25,000 - could set the stage for the index to rally towards 25350.

On the downside, support is placed at 24,850. A breach below this level may weaken the current rally and trigger some profit booking.

Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities

Nifty on the weekly chart formed a long bull candle after the minor dip of the previous two weeks. The weekly chart formation indicates a bullish rising three-method type pattern, which is an uptrend continuation pattern.

The next upside levels to be watched for Nifty are around 25200 and the next 25500 levels in the coming week. Immediate support is placed at the 24,850 levels.

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