As many as 50 smallcap stocks logged a double digit rise in their stock prices – in the range of 10-40 per cent last week, even as the 30-share BSE Sensex snapped its longest weekly winning streak in six years, over profit booking at record high levels earlier in the week.
On the stock-specific front, HFCL, Kiri Industries, Hindustan Copper, SVP Global, Arvind, Cyient, SpiceJet, Heritage Food, Thermax, Coffee Day Enterprises, INOX Borax, Sangam India, V-Mart Retail, MSTC, IIFL Securities, HCL Infosys, and others are among the smallcaps that logged a double-digit rise in their share prices last week.
Markets’ Weekly Print
On the weekly front, the BSE benchmark declined 376.79 points or 0.52 per cent and the Nifty dipped 107.25 points or 0.49 per cent – dragged by the fall in recent outperformers like financials and auto stocks.
The blue-chip indexes had gained 12.65 per cent and 12.07 per cent over the last seven weeks, aided by strong domestic macroeconomic data, a return of foreign inflows due to improving US rate outlook and moderation in oil prices.
The BSE Midcap index lost almost a per cent, while the BSE Smallcap index declined by about 0.2 per cent this week. “The rally in Indian markets will continue as the outlook remains positive, but the pace may moderate a bit,” said Ajit Banerjee, chief investment officer at Shriram Life Insurance.
This month, the surge in domestic equities closely follows Fed Chair Jerome Powell’s acknowledgment of the risks of delaying rate cuts, bolstering expectations of a 25 basis points (bps) rate cut by March and fueling a rally across global stock markets.
The dovish stance by US Fed also led to a crash in US bond yields to 4 per cent, which intensified foreign inflows this month. Foreign institutional investors (FIIs) were net sellers for all five days last week, divesting over ₹6,000 crore, but domestic investors pumped over ₹9,000 crore in Indian equities.
Vinod Nair, Head of Research at Geojit Financial Services said, “The ‘buy on dips’ strategy continues to drive investors during the subdued week. Mid and small caps remain in the limelight, benefiting from ease in oil prices and the anticipation of a potential rate cut in CY24, supported by slower-than-expected US GDP growth and weakness in the dollar, signalling early rate cuts.”
‘’Realty and Auto sectors shine, while PSU banks outperform peers on account of improvements in balance sheets and profitability. Despite a premium valuation, the short-term positive trend persists, supported by a strong revival in FIIs buying & stock specific actions. Heading into the festive season and year-end, we can anticipate a range-bound trade scenario with limited data points,” added Nair.
Frontline indices the Sensex and the Nifty 50 closed in the positive territory for the second consecutive session on Friday, December 22, on gains led by IT heavyweights, including Infosys, HCL Tech and Wipro, amid mixed global cues.
Domestic market sentiment has been broadly positive lately on healthy macroeconomic prints. Also, global inflation going down globally and the US Federal Reserve saying they won’t raise interest rates anymore have made investors even more positive. However, concerns over valuations have also been mounting, triggering intermittent profit-booking.
Sensex closed with a gain of 242 points, or 0.34 per cent, at 71,106.96 while the Nifty 50 ended the day 94 points, or 0.44 per cent, higher at 21,349.40 on Friday. Mid and smallcaps outperformed the benchmark Sensex. The BSE Midcap and Smallcap indices jumped 0.74 per cent and 1.04 per cent respectively.
Information technology companies, reliant on US revenue, gained 2.27 per cent as gross domestic product (GDP) for the September quarter was revised down. The data indicated a cooling of the US economy, heightening bets of a rate cut in the first half of 2024.
Metals advanced 1.71 per cent after a dip in the US dollar following the GDP data. A decline in the US dollar is a beneficial for metals as it makes them less expensive for buyers using other currencies.
Where are markets headed?
Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services said, ‘’The underlying tone of the market remains positive. However, as we enter into holiday mood starting this weekend, we expect market to remain range bound with stock specific action next week.”
Analysts noted that Indian markets attracted not only retail investors to equities but also promoters of many companies rush to go public. In 2023, the mainboard IPOs number was the second highest in over 10 years with around 57 companies raising around ₹49,000 crore. This rally is expected to continue in 2024, with around ₹60,000 crore of sales shares lined up.
As we are entering into 2024 with record-high markets, several crucial factors that should be focused on going ahead are global and domestic cues, Fed interest rates, FII/DII investment pattern, inflation, general and state elections, upcoming quarterly earnings and Budget. It is expected that the market will perform better in the coming year also,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services 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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