Bulls remained in control for most part of the week pushing Sensex and Nifty above 50,000 and 15,000, respectively, except for the sharp selloff on Friday. The selling was triggered by exit poll results, delay in vaccination for 18-45 age group and concerns over economic recovery if COVID situation escalates.
The smallcap index outperformed the benchmarks. Experts say the reason could be that the smaller companies are reporting better earnings
The S&P BSE Sensex gave up gains but still closed 1.8 percent higher for the week while the Nifty50 closed with gains of 2.02 percent for the week ended April 30, compared to the 1.8 percent rise in the S&P BSE Midcap index, and over 3 percent rally in the S&P BSE Smallcap index.
On the monthly basis, both Sensex and Nifty50 closed in the red while the S&P BSE Midcap index rose 0.65 percent, and the S&P BSE Smallcap index closed with gains of about 5 percent for the month of April.
As many as 86 stocks in the S&P BSE Smallcap index rose over 10 percent. These include Uflex, The Federal Bank, HT Media, Hindustan Copper, KPR Mills, HEG, Jindal Stainless, DB Realty, IDFC, Tinplate Company, Mastek, and Balaji Amines.
Strong earnings from IT heavyweights kept the momentum going for Indian markets in the week gone by. On the global front, dovish US Fed, and positive global cues helped benchmark indices climb crucial resistance levels.
But, a rise in COVID-related cases may lead to further mini lockdowns across India and that could hurt the earnings growth of India Inc. dented sentiment.
A lot of action was seen in the smallcap segment both from a weekly as well as monthly perspective. Traditionally, large-caps tend to outshine small and mid-caps during market correction as investors believe that big companies are a better place for safe return, but it looks like investors are chasing growth, suggest experts.
“This time things are very different, as the Nifty index has been trading down almost 800 points from its lifetime high, but the Nifty Small Cap index is trading at its lifetime high,” Sumeet Bagadia, Executive Director, Choice Broking told Moneycontrol.
“One reason could be that the medium and smaller companies have also been reporting better results than some of their large-cap counterparts, and this, in turn, is making institutional investors evaluate their potential in a new light,” he said.
Sectorally, buying was seen in metals that rose over 10 percent in the week gone by, followed by energy as well as banking stocks.
Banking and metal stocks led the weekly rally backed by a strong earnings outlook. However, banking indices gave away its weekly gain owing to heavy selloffs towards the end of the week.“It was triggered by weak results announced by mid & small banks and NBFC like M&M Finance. Showing increased NPAs & provisions. Of source extended COVID situation is expected to further delay banks outlook,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.
“In the week ahead, along with Q4 earnings results and updates on covid restrictions, state election results are also expected to influence the momentum. The market also awaits Manufacturing and Service PMI data for the month of April which is expected to be lower than the previous level,” he said.
Technical Outlook:
The Nifty50 gave up gains after touching 15000 on an intraday basis which suggests that there is some pressure at higher levels. Crucial support for the index is placed at 14,200 levels.
“The market has exhibited a lot of fear on the screen before the outcome of the Elections. The news flow related to the quarterly result of the index giant Reliance Industries and rising coronavirus cases,” Shrikant Chouhan, Executive Vice President (Equity Technical Research), Kotak Securities said.“The market entered into a short-term uptrend by crossing the level of 15000, but we saw a weekly closing far away from the highest levels. We feel it should act as a bullish continuation formation. Supports would be 14600, 14500, and 14300,” he said.
Chouhan further added that on the higher side, again 14850 and 15000 would be major obstacles, and on the dismissal of 15050, Nifty would rally to 15500 levels.
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