Over 100 smallcap stocks gain 10-50% as market gains nearly 2%

Indian benchmark indices ended with nearly 2 percent gain in the week ended on December 10 on supportive global markets on easing fears of omicron, while in-line RBI policy outcome also boosted the investors’ sentiments.

In the last week, BSE Sensex added 1,090.21 points (1.88 percent) to close at 58,786.67, while the Nifty50 rose 314.6 points (1.82 percent) to end at 17,511.3 levels.

On the sectoral front, BSE Realty index rose over 5 percent, Metal index added 4.7 percent and Capital Goods index jumped 3.3 percent.

Among broader indices - BSE Midcap index added 2 percent and Smallcap index rose 3 percent.

In the last week 109 smallcap stocks rose between 10-50 percent including Network 18 Media & Investments, Reliance Communications, Hindustan Construction Company, 63 Moons Technologies, Mahanagar Telephone Nigam, Ramky Infrastructure, BCL Industries and Shree Renuka Sugars.

On the other hand, Nxtdigital, HCL Infosystems, Panacea Biotec, Prime Focus, AAVAS Financiers and Indraprastha Medical Corporation were among the major losers in the BSE Smallcap index.

"The equity markets witnessed unprecedented volatility during the course of the week that has just gone by, mainly driven by factors beyond the borders – like the developments around the US tapering and liquidity normalization, and the emergence of the new challenge in form of the new variant of the virus, bringing back some controls on movement across borders in many countries, and also within borders in some others," said Joseph Thomas, Head of Research, Emkay Wealth Management.

While these factors resulted in some selling, new buying too emerged swiftly in the form of people wanting to capitalize on the better levels available."

"The domestic equities have witnessed regular inflows from the retail investors in the form of SIPs, while the FPIs continued to be sellers reflecting the general mood among overseas investors for emerging markets."

"These global factors, especially the US inflation numbers and the developments around central bank policy meetings are likely to influence the course of the markets,” he added.

IDBI Bank, Vodafone Idea, DFC First Bank, Jindal Steel & Power, GlaxoSmithKline Pharmaceuticals, ABB India, Steel Authority of India, Canara Bank and Aditya Birla Capital remained among major gainers on the BSE midcap index.

The BSE 500 index rose 2 percent with 34 stocks rose between 10-50 percent supported by Network 18 Media & Investments, IFCI, Trident, HFCL, TV18 Broadcast, Just Dial, Tanla Platforms, CreditAccess Grameen, IDBI Bank and Indian Energy Exchange.

"Domestic equities opened the week with ambiguities surrounding the new covid variant, however, it staged a strong recovery following reports that the new virus isn’t as deadly as anticipated earlier. The market was also rejuvenated by RBI’s continued accommodative stance while MPC kept the rates unchanged," said Vinod Nair, Head of Research at Geojit Financial Services.

"The GDP forecasts for FY22 were maintained at 9.5%, stating confidence in economic recovery and RBI maintained inflation forecast below the market estimates. Moreover, additional liquidity freed up by the Chinese Central Bank through policy easing boosted the Chinese markets."

"The market trend in the coming week will be determined by the domestic and US November inflation data. The market is expecting both domestic and US inflations to be higher than its previous month levels," he added.

Where is Nifty50 headed?

Ajit Mishra, VP - Research, Religare Broking:

Markets will first react to macroeconomic data in early trade on Monday. On the global front, the upcoming Fed meet will remain in focus along with the updates on the new variant.

Amid all, we reiterate our view to maintain a positive yet cautious approach and focus more on stock selection. Nifty needs to hold the 17300-17400 zone for further recovery.

Yesha Shah, Head of Equity Research, Samco Securities:

Domestic inflation data and the FOMC meeting will be crucial events that will dominate movements in the Indian benchmark indices. Because the RBI provided no guidance on the rate hike timeline, all eyes will be on the stand FOMC adopts on tapering and interest rate hike trajectory.

While it is widely expected that the FED will consider the intensity of the Omicron variant before aggressively preponing tapering plans, any surprises in the announcements can cause choppy movements. Thus, investors should remain cautious and consider value investing till the markets continue to let off steam from excess valuations.

Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities:

We are of the view that the uptrend will continue but before a fresh breakout the market may consolidate within the range of 17,350 to 17,600. Above the same, we could see the continuation wave up to 17,700-17,850 levels.

On the flip side, dismissal of 17,350 could possibly trigger one more leg of correction up to 17,300-17,260 levels. Contra traders can take a long bet near 17,260 level with a strict support stop loss of 17,200.

In the meantime, after a reversal formation the Bank Nifty is currently trading near the 50 and 20 day SMA. Direction wise, the uptrend will remain intact as long as Bank Nifty does not break 36,550, which is an important retracement level.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas:

Structurally, the consolidation can continue for some more time before the Nifty prepares for the next leg on the upside.

The index can take a dip towards 17,300-17,250 in order to fill up a recent gap area on the daily chart. On the other hand, once the level of 17600 is crossed on a closing basis, it will make room for the Nifty to take a shot at 18000 subsequently.

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