More than 35 smallcap stocks logged a double digit rise in their stock prices - in the range of 10-50 per cent last week, with the benchmark BSE Sensex logging a marginal weekly gain as investors shift their focus to fundamentals and macroeconomic indicators.
The frontline indices remained resilient in the face of fading expectations of early rate cuts by the US Federal Reserve.
On the stock-specific front, Jubilant Industries, Force Motors, Sandhar Technologies, MRPL, Tips Industries, Borosil Renewables, 63 Moons Tech, Apollo Pipes, Novartis, HPL Electric & Power, Dilip Buildcon, Anuh Pharma, ASM Technologies, Strides Pharma Science and others are among the smallcaps that logged a double-digit rise in their share prices last week.
Markets' Weekly Print
Markets traded volatile in the continuation to the prevailing consolidation phase but managed to edge higher. The beginning was subdued however gradual recovery in the following sessions not only pared losses but also helped the index to close around the week's high.
On the benchmark front, both Nifty and Sensex gained over a per cent each to settle at 22,040.70 and 72,426.64 levels respectively. Most sectors traded in sync with the move wherein auto, IT, energy and banking were among the top performers. The BSE Midcap index closed almost a per cent higher. The BSE Smallcap index underperformed and closed flat for this week.
The broader indices oscillated sharply on both sides and eventually settled mixed. Overall, the broader, more domestically-focused small-caps of benchmarks fell 0.5 per cent and mid-caps added 0.5 per cent, underperforming the benchmarks, amid valuation concerns.
"The shift to large-caps is imminent. It is becoming a consensus call, as small- and mid-caps have run up way ahead of fundamentals while large-caps look reasonable in terms of valuations," said Pramod Gubbi, co-founder of Marcellus Investment Managers.
Auto stocks led the gains, rising 4.3 per cent for the week. Mahindra & Mahindra logged 11.5 per cent weekly gain, on hopes of sustained earnings stability and a supply deal for electric vehicle parts with Volkswagen.
The public sector banks also jumped 2.7 per cent, led by State Bank of India, on a strong earnings outlook and valuation comfort. The country's top state-owned lender was among the top weekly gainers on the benchmark index, rising four per cent. Bharat Petroleum Corp Ltd (BPCL) added 6.6 per cent, extending its post-results jump to the third week, as analysts see room for further rally.
''The Indian auto sector had a strong week, lifted by anticipated high demand and a favourable earnings outlook. PSU Banks, benefiting from improved asset quality and the government's focus on fiscal prudence, are attracting investors. Large caps gained traction, with mid and small caps seeing profit booking, driven by valuation gaps,'' said Vinod Nair, Head of Research, Geojit Financial Services.
Foreign institutional investors (FIIs) were buyers for three out of five sessions last week, yet the total divestment stood at ₹6,240.55 crore, while domestic institutional investors (DIIs) were buyers for all five sessions, with a total investment of ₹8,731.6 crore, according to stock exchange data. On a monthly basis, FIIs have sold shares in Indian markets to the tune of Rs. 14,171 crore between February 1-16, 2024.
Previous Session
The domestic market ended with gains for the week ended Friday, February 16, and rose for the fourth straight day, tracking gains in blue chips like L&T, Infosys and M&M, amid a firm trend in global markets. The anticipation of rate cuts has been a significant driver for the market for the last few months. While US inflation remains above the US Fed's two per cent target, the economy is showing signs of some cooling.
On Friday, equity benchmarks the Sensex and the Nifty closed with decent gains amid positive global cues. Nifty 50 closed at 22,040.70, up 130 points, or 0.59 per cent while the Sensex closed with a gain of 376 points, or 0.52 per cent, at 72,426.64. With this, the market benchmarks extended their gains into the fourth consecutive session.
Mid and smallcap indices outperformed the benchmarks. The BSE Midcap index rose 0.78 per cent while the Smallcap index clocked a gain of 0.68 per cent. All sectoral indices, except for Nifty Oil & Gas (down 0.61 per cent) and PSU Bank (down 0.36 per cent), closed higher.
"A surge in buying interest for large-cap stocks propelled the Nifty back above the recent consolidation level, leading to the highest-ever closing on the weekly timeframe," said Rupak De, Senior Technical Analyst, LKP Securities.
Where are markets headed?
''Q3 earning season has ended on a buoyant note with Nifty delivering a strong beat with a 17 per cent YoY PAT growth vs. est. of +11 per cent. We expect market sentiment to strengthen further as the prospect of a pre-election rally is quite strong…Nifty is hovering near all-time zones and is all set to make new highs next week,'' said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.
Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd believes that while positive global cues boosted investors' sentiment, the recent weakness has allowed investors to take exposure to beaten-down stocks. ''There would be bouts of intra-day volatility going ahead, while investors would be closely watching the US Fed's move on interest rates going ahead,'' said Tapse.
Technical View: ''We suggest maintaining a positive yet cautious stance as Nifty is set to retest its record high. Needless to say, we need sustainability above 22,150 to end the consolidation and march towards the 22,500+ zone else profit taking may resume,'' said Ajit Mishra, SVP - Technical Research, Religare Broking Ltd.
''Traders should keep a close watch on the banking index for cues while others may continue to play a supportive role on a rotational basis. Besides, the performance of the global indices, especially the US, will remain on their radar,'' added Mishra.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.