Over 45 smallcaps rise 10-35% as Sensex posts longest weekly win in 3 years
On the stock-specific front, 63 Moons Tech, Inox Wind, Cantabil Retail, Asian Energy Services, SpiceJet, KIOCL, RBL Bank, Raymond, Reliance Power, Balaji Telefilms, TV 18 Broadcast, HBL Power, Zee Media Corp, Home First Finance, Bharat Dynamics, and others are among the smallcaps that logged a double-digit rise in their share prices last week.
Markets’ Weekly Print
Domestic equity benchmarks gained for sixth straight week as the NSE Nifty 50 and S&P BSE Sensex indexes rose about 3.5 per cent to log their best week since July 2022. After a strong gap-up start, benchmark indices moved from strengthen to strengthen and finally settled around the week’s high.
Among the key indices, Nifty 50 tested a new milestone at its lifetime high and Sensex also reached closer to the 70,000 level. The rotational buying in heavyweights across sectors helped the indices to maintain a positive tone despite overbought readings.
The more-domestically focussed small- and mid-caps underperformed the blue-chips this week, but gained 1.16 per cent and 2.35 per cent, respectively, to fresh record highs. The small- and mid-cap indexes gained 48 per cent and 41 per cent so far this year, outperforming a 15.8 per cent gain in the Nifty 50.
The Bank Nifty, meanwhile, surged by more than 5 per cent, highlighting the strong investor sentiment towards the banking sector. Energy stocks jumped 7.90 per cent, extending gains for the sixth week, on softer crude oil prices.
Financials climbed about 5 per cent for the week after several analysts reiterated bullish views on the sector in anticipation of a rally before the 2024 general elections. RBI’s six-member Monetary Policy Committee on Friday decided to keep the benchmark repurchase (repo) rate at 6.5 per cent.
The central bank raised its forecast for economic growth to 7 per cent from 6.5 per cent for the current fiscal, maintaining India’s position as the world’s fastest-growing major economy, after a stronger-than-expected 7.6 per cent growth in the July-September quarter.
“Despite the RBI maintaining policy status quo, an upgraded GDP growth forecast for FY24 boosted investor confidence. Measures to address the liquidity deficit, including the reversal of Standing Deposit Facility (SDF) and Marginal Standing Facility (MDF) facilities, positively impacted financials, leading to a 5 per cent gain in Nifty Bank for the week,” said Vinod Nair, Head of Research at Geojit Financial Services.
‘’IT, consumer, auto, and realty sectors performed well due to valuation comfort, festive momentum, and a strong uptick in residential sales. Mid & small caps continued to outperform, driven by a healthy economic outlook, strong Q2 earnings, and corrections in oil prices,” added Nair.
Also Read: After RBI MPC verdict, US Fed to unveil policy decision next week: Here’s what experts predict
Previous Session
On Friday, the frontline indices ended in positive territory over gains led by banking and IT stocks, including HDFC Bank, Infosys and ICICI Bank, after the RBI’s policy decision and the upside in GDP growth forecast for the financial year.
Following the policy announcement, the Nifty 50 breached the 21,000 mark for the first time and hit its all-time high of 21,006.10 during the session. The Sensex also hit its fresh record high of 69,893.8 during the session.
Nifty 50 closed at 20,969.40, up 68 points, or 0.33 per cent while the Sensex closed the day at 69,825.60, up 304 points, or 0.44 per cent. The BSE Midcap and Smallcap indices also hit their fresh record highs of 35,523.69 and 41,548.63 respectively, during the session.
However, both erased their gains and ended in the red. The BSE Midcap index settled with a loss of 0.16 per cent at 35,290.91 while the Smallcap index lost 0.44 per cent to close at 41,104.37.
‘’While largecaps enjoyed the lion’s share of the rally, driven by significant institutional inflows, midcap and smallcap stocks witnessed a slight underperformance. This was likely due to profit-booking after recent strong gains and a shift in investor focus towards larger, more established companies,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Rate-sensitive sectors like financial services and realty gained 0.91 per cent and 0.53 per cent, respectively, after the RBI maintained its key repo rate at 6.50 per cent. Meanwhile, the turnover of derivatives in BSE Sensex scaled a new milestone of ₹200 lakh crore on the weekly expiry of Friday. The total turnover was ₹213.9 lakh crore as 30.6 crore contracts were traded.
What’s driving the rally?
The Indian economy grew 7.6 per cent during the July-September quarter for fiscal 2023-24 (Q2FY24), remaining the fastest-growing major economy in the world, according to the gross domestic product (GDP) data released by the statistics ministry.
Also, the Bharatiya Janata Party (BJP) winning by a majority of votes in the the hindi heartland – Madhya Pradesh, Rajasthan, and Chhattisgarh during the state assembly elections on December 13, instilled a sense of political stability ahead of General Elections 2024. Market analysts say that a stable political environment could boost investor confidence and drive the market higher.
Falling crude oil prices provided much-needed relief to the Indian economy, as lower oil import bills translate to lower inflation and a more favorable balance of payments. It also becomes a positive factor for oil marketing companies.
‘’A weakening US dollar index and lower US bond yields further bolstered investor sentiment by making Indian equities more attractive relative to their global counterparts,” said Santosh Meena, Head of Research, Swastika Investmart.
Foreign Institutional Investors (FIIs) played a pivotal role in driving market activity, demonstrating their confidence by purchasing shares worth over ₹9,000 crore. Foreign investors have emerged as net buyers of Indian equities for three out of five sessions this week and pumped a total of ₹9285.11 crore.
Where are markets headed?
Analysts said that major central banks globally are lined up next week to announce their policy decision, which is likely to keep the market range bound. The US Federal Reserve will announce its policy decision on December 13.
Ajit Mishra, SVP – Technical Research, Religare Broking Ltd said, ‘’We maintain our positive view on markets despite the overbought conditions and suggest participants look for buying opportunities on dips. Nifty has the potential to test the 21,200-21,500 zone and expects the index to hold the 20,300-20,550 zone in case of profit taking.”
‘’Despite overbought technical conditions, the short-term technical outlook for markets continues to be in favor of the bulls, with support for Nifty placed at 20,777-20,521 levels and resistance at 21,121-21,331 range,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd
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.
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Published: 09 Dec 2023, 07:59 PM IST
