Over 40 smallcap stocks gain 10-40% even as Nifty 50, Sensex settle flat; Aster DM, Hind Copper among gainers

Around 40 smallcap stocks logged gains in the range of 10-40 per cent even as Nifty 50 and Sensex settled the week flat yet marked a fourth consecutive week of gains. This came after the 30-share BSE Sensex also touched an all-time high for the very first time at 75,124 level last week but eventually settled lower near 74,244 dragged by weak global cues. Hindustan Copper, Aster DM Healthcare, Kolte Patil Developers, Ramco Systems were among the top smallcap gainers.

Abans Holdings, Transformers & Rectifiers, Waree Renewable Tech, IIFL Finance, KEI Industries, Anand Rathi Wealth, Llyods Metals, Force Motors, Suryoday Small Finance Bank, Motilal Oswal Financial Services among other smallcap stocks logged a double-digit growth in their share prices last week.

Markets' Weekly Print

Domestic equity benchmarks traded mixed and finally settled almost flat, taking a pause after three weeks of advance. The beginning was upbeat, followed by modest gains in the following sessions however profit taking in the last session engulfed all the gains. Weakness in global markets combined with caution ahead of the earnings continues to weigh on the sentiment.

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The broader indices too witnessed a similar trend as smallcap gained nearly a per cent while midcap closed flat. Metal stocks rose 2.90 per cent and were the top weekly sectoral gainer by percentage. Pharma stocks dropped 1.94 per cent this week, hurt by a 4.29 per cent drop in Sun Pharma following an order by the US drug regulator related to the company's Dadra facility.

Among stocks, Eicher Motors, Hindalco, Tata Consumers were the top Nifty gainers for the week while Sun Pharma, Titan, and Cipla were the top losers for the week. Gold rose to 73,958 hitting an all-time high and delivering a gain of 1.71 per cent whereas crude fell by 1.33 per cent closing below the 7,200 level.

Foreign institutional investors (FIIs) were net sellers in Indian markets while inflows led by domestic institutional investors (DIIs) balanced the outflows by foreign investors. FIIs were sellers for four out of five sessions last week and the net outflow stands at ₹6,526.71 crore, while DIIs were buyers for all sessions, with a total investment of ₹12,232.61 crore, according to stock exchange data.

Global market ended the week on a negative note as higher-than-expected US retail inflation for March has delayed expectations of the Fed interest rate cuts to beyond June. The US consumer price index (CPI) rose 0.4 per cent month-on-month and 3.5 per cent year-on-year, accelerating from 3.2 per cent in February.

Tata Consultancy Services (TCS) kicked off the earnings season with its January-March quarter results for fiscal 2023-24 (Q4 FY24). The tech major reported a growth in both profit and revenue. India's latest March CPI print came in 4.85 per cent which is at its lowest level since June 2023.

‘’Uncertainty over the US Fed rate cut timing and concerns about rising tensions between Iran and Israel led to a decline in global markets. The rise in bond yields due to hotter-than-expected US inflation and amendment in the India-Mauritius tax treaty likely to impact FII flow dampened the sentiments,'' said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Previous Session

The frontline indices witnessed substantial profit booking on April 12 and plunged by one per cent weighed down by financial and information technology (IT) stocks, as hot US inflation data dampened expectations of early and imminent interest rate cuts by the US Federal Reserve. The drop on Friday erased weekly gains for the benchmark indices.

Investors' wealth eroded by ₹2.52 lakh crore as Sensex tanked 793.25 points due to heavy selling after its earlier record-breaking rally. In the broader market, the BSE smallcap gauge declined 0.60 per cent and midcap index dipped 0.49 per cent. A sharp rise in crude oil prices and rupee's downward spiral also dampened the sentiment and contributed to the overall slump.

Sensex dropped 1.06 per cent to settle at 74,244.90 with 27 of its components ending in the red. During the day, it dropped 848.84 points or 1.13 per cent to 74,189.31. Nifty declined 234.40 points or 1.03 per cent to close at 22,519.40 with 45 of its constituents settling lower. All Nifty sectoral indices closed in the red.

‘’The upcoming general elections in 2024 and the commencement of the key earnings season, contributed to a heightened sense of volatility in the market, prompting investors to secure their profitable positions in anticipation of increased market volatility,'' said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.

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Where are markets headed?

Analysts expect markets to remain volatile in the near term given the global concerns and the start of an election next week. With the onset of the earning season, the focus will more shift toward domestic cues along with macro data points. Markets on Monday will react to India’s inflation data and TCS Q4 numbers which will be released today.

Vinay Paharia, CIO, PGIM India Mutual Fund said, ‘’Valuation excesses are stark in the mid and small cap buckets, driven by hopes on continued strong corporate earnings growth and a stable policy environment. Large inflows in mid and small caps have also contributed towards this re-rating. ‘’

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‘’We find better relative value in the large cap category and the strong (high growth + high quality) mid and small cap companies, and believe that they still present an attractive opportunity for long-term investors,'' added Paharia.

Technical View: While the Indian economy is on a firm footing, the spate of negative news, especially from the global front, would at times halt the Indian equities upward march, according to market experts.

‘’Technically, bulls will heave a sigh of relief only above the 22,800 mark. Till then, it seems a bear machete is likely to rule the roost. Benchmark Nifty has a strong support at 22,339-22,101 levels, while the index faces resistance at 22,810 to 23,100 level,'' said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.