These 34 smallcaps log double-digit rise even as Sensex records worst week in 15 months; do you own?

As many as 34 smallcap stocks logged a double digit rise in their stock prices last week - in the range of 10-38 per cent, even as the 30-share BSE Sensex declined 2.7 per cent over weak global cues and foreign fund outflows. 

In the week between September 18- September 22, domestic equity benchmark Sensex logged its worst week in over 15 months on lingering worries over a higher global interest rate environment following the US Federal Reserve's hawkish tone. A steep decline in the stock price of heavyweight HDFC Bank also weighed on market sentiment throughout the week.

Frontline indices Sensex and Nifty settled lower for the fourth consecutive session on Friday, September 22, amid external cues as the US Treasury yields rose to their multi-year high levels and crude oil prices rose by about a per cent, weighing on investors' sentiment for riskier equities.

Foreign portfolio investors (FPIs)  have sold ₹10,164 crore worth of Indian equities and offloaded a total of ₹10,100 crore as of September 22, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL ) data.

Foreign institutional investors (FIIs) have sold ₹7,300 crore in the last three trading sessions and around ₹16,934 crore in Indian equities till September 21. Rising bond yields in the US and strong dollar index are negative for capital flows. Strength in the US dollar index and the US 10-year bond yield remaining high are short-term negatives for FPI flows to emerging markets like India, according to analysts.

"We are seeing some consolidation in the market after the benchmark indexes surged to all-time highs and global markets are weaker," said Ajit Mishra, senior vice president for research at Religare Broking.

On Friday, Nifty 50 closed with a loss of 68 points, or 0.34 per cent, at 19,674.25 while the Sensex ended at 66,009.15, down 221 points, or 0.33 per cent. Mid and smallcaps outperformed the benchmarks as the BSE Midcap index ended lower by 0.14 per cent while the BSE Smallcap index ended with a nominal gain of 0.04 per cent.

On the week, the S&P Smallcap index declined 1.77 per cent dragged by Balmer Lawrie Investment, Cressanda Solution, Jupiter Wagons, GTL Infrastructure, PTC India, Cochin Shipyard, Jaiprakash Associates, RACL Geartech, among others.

However, as many as 34 smallcap stocks gained in the range of 10-38 per cent in the week ended September 22, outperforming the index. Stocks such as IFCI Ltd, EKI Energy Services, KSB Ltd, Artemis Medicare Services, AGI Greenpac, UCO Bank, PNB Gilts are among the smallcaps that logged a double-digit rise in their share prices last week.

Where are markets headed?

In a high interest-rate environment, investors prefer to buy value stocks that offer higher dividend yield and are available at "comfortable" valuations, said Saurabh Jain, assistant vice president of research at SMC Securities.

The frontline indices have added 2 per cent each so far in September, even after the recent correction. The inclusion of Indian bonds in JP Morgan's government bond index on Friday had also provided some support.

"Nifty experienced consistent selling pressure throughout the week, resulting in a decline of 2.80 per cent from its all-time high. This recent correction has caused it to dip below the critical 21-day Exponential Moving Average (21EMA),'' said Rupak De, Senior Technical analyst at LKP Securities.

‘’The sentiment appears bearish at this point, with a key support level identified at 19,600. A breach below 19,600 could potentially initiate a more significant market correction. On the upside, 19,800 is expected to serve as a resistance level,'' added De.