Small & Midcaps underperform in a truncated week; 47 stocks fell 10-30% in 3 days

The Indian market slipped in red for the week ended August 16, but bulls managed to push the benchmark indices above its crucial resistance levels.

The S&P BSE Sensex closed above 37,000 while the Nifty50 also broke above 11,000 levels. The Nifty50 bounced back after hitting a low of 10,901 in the week gone by.

Muted corporate results, no big bang steps or stimulus announced by the government which most investors were hoping for led to a fresh round of selling. On the global front, escalating trade war concerns between the US and China, an inverted US yield curve weighed on sentiment.

For the week, the S&P BSE Sensex fell 0.61 percent while the Nifty50 was down by 0.56 percent but the big carnage was seen in the broader market space.

The S&P BSE Smallcap index was down 0.91 percent while the S&P BSE Midcap index fell 1.32 percent for the week ended August 16.

In the S&P BSE Smallcap index, as many as 48 stocks fell 10-30 percent for the week ended August 16 which include names like Aarti Industries, Surya Roshni, Orient Paper, JBF Industries, Cox & Kings, Coffee Day Enterprises, Inox Wind, GIC Housing, Shilpa Medicare, and Saregama India etc. among others.

Here is a list of 20 stocks out of 48 in the S&P BSE Smallcap index which fell 10-30 percent for the week ended August 16. The stocks are shorted based on returns:

With no major cues in the coming week, markets are likely to trade in a range and the movement will be largely driven by global cues, suggest experts.

“The earnings season has ended and there are no fresh key domestic triggers. Hence, the focus will now shift to earnings recovery and investors will also take cues from global developments,” Ajit Mishra Vice President – Research, Religare Broking Ltd, told Moneycontrol.

“Therefore, we maintain our cautious stance on the Indian markets in the near term. Investors would keep a close watch on progress on US-China trade talks, movement of crude oil price and rupee/dollar,” he said.

Technical Outlook:

The Nifty50 closed the week in the red, forming a bearish candle on the weekly charts. The weekly price action formed an Inside Bar as the index traded within the previous week trading range indicating consolidation.

The Nifty50 on expected lines managed to hold previous week low 10,782 and formed a higher trough in the weekly chart for the first time in last six weeks despite global volatility indicating abating downward momentum and presence of strong support around 10,800 levels

“In the coming week, we expect the index to maintain positive bias and move above last two weeks high (11,181) and extend the up move towards 11,300 levels in the coming weeks is the confluence of 200 days EMA and the 38.2% retracement of the entire decline (12103-10782),” Dharmesh Shah, Head – Technical, ICICI direct, told Moneycontrol.

"Structurally, since 2009, the index has not corrected for more than 9 to 11 weeks in a row. In the current context, the index after the recent correction formed a higher trough on the eleventh week,” he said.

Shah further added that the index was expected to maintain the same rhythm and start forming higher high-low on the weekly chart in the coming weeks. Meanwhile, 10,800 would continue to act as a key support threshold as it is 61.8% retracement of a major up move (10,005 – 12,103).