Small & Mid-caps underperform; these 35 BSE stocks rose 10-50% in the week

It was a volatile week for Indian markets as both global and local cues influenced the direction of the market. Small and mid-cap indices underperformed but there was plenty of action in individual names.

The S&P BSE Sensex was down 0.8 percent while the Nifty50 slipped 1.2 percent for the week ended April 25 while the S&P BSE Midcap index fell over 3 percent, and the S&P BSE Smallcap index closed with a loss of 1.5 percent for the week.

Stocks in the S&P BSE 500 index which bucked the trend include names like IFB industries, Navneet Education, HEG, Aurobindo Pharma, Dewan Housing, Muthoot Finance, Graphite India, UCO Bank, Alembic Pharma, and Reliance Capital among others.

There are nearly 100 stocks in the S&P BSE Smallcap index which rose 10-40 percent in a week that include names like Den Networks, Future Enterprises, Ruchi Soya, Suven Life, Unitech, Kwality, and Eros International Media, etc. among others.

The expectation of a stimulus package back home, and globally as well as the Jio-Facebook deal, muted results from India Inc. for March quarter, rise in COVID-19 cases in India and Franklin Templeton winding up their six credit risk schemes on April 24 led to volatility on D-Street throughout the week gone by.

"Earnings season has been lackluster as expected and management guidance for the next quarter has also not been very insightful. This shows that many companies are still grappling to assess the actual impact of the lockdown, and seem to be unsure of when things get back to normal," Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

"With the lockdown being extended and expected to be extended beyond May 3, the June quarter results will be much worse than the March quarter results. The closure of schemes by Franklin Templeton fund will definitely have an impact on investor confidence and could affect the already lower market volumes," he said.

Earnings from India Inc., April F&O expiry, the trajectory of COVID-19 cases, as well as hopes of another stimulus package from the government, will dictate the market trend.

Any easing of lockdown restrictions will be taken as a positive for the market as a whole, suggest experts. On the earnings front, IndusInd Bank and Axis Bank will be reporting their results along with FMCG giant Hindustan Unilever.

Technical outlook:

The Nifty50 closed with losses of more than 1 percent for the week ended April 24. Broader market relatively underperformed as Nifty Mid-cap and small-cap lost 3 percent, each. Sectorally, Pharma and IT outshone while metal and auto underperformed.

The weekly price action formed a small-bodied bear candle with a long lower shadow carrying higher high-low, indicating breather after past two weeks sharp up move of around 12 percent.

Experts are of the view that a breakout above 9400 and a breakdown below 8800 is likely to dictate the trend for markets. Any dips should be used to accumulate quality stocks.

“In the upcoming truncated week, we expect volatility to remain high owing to monthly derivative expiry week. In the process, follow-through strength above current week’s high (9,343) would be required to accelerate further upward momentum,” Dharmesh Shah, Head – Technical, ICICI direct told Moneycontrol.

“Failure to sustain above current weeks high (9,343) would lead to prolonged consolidation in the broad range of 9,400 - 8,800, amid stock-specific action that would make market healthy,” he said.

Shah further added that elevated volatility in the coming weeks should be capitalized to accumulate quality stocks in a staggered manner from a minimum one-year prospective.

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