Overcome small & midcaps! Over 40 stocks in the BSE 500 rose 10-40% in just 5 days

Overcome small & midcaps! Over 40 stocks in the BSE 500 rose 10-40% in just 5 days

At the start of the week, the benchmark indicators seem to be strong enough for the market. To cross key resistance levels. But the bears took control in the second half of the week and pushed the Sensex below 38,000. While the Nifty 50 was below 11,200 levels.

The S&P BSE Sensex wiped out gains for the week, ending with a slight cut of 0.4 percent. While the Nifty 50 fell 0.3 percent for the week ended August 14.

The real action has seen in a wider market space, which surpassed the benchmark indicators. The S&P BSE Mid-Cap index rose 1.5 percent. While the S&P BSE Small-Cap index ended the week ended August 14 with a gain of 1.3 percent.

There are as many as 41 stocks in the S&P BSE 500 index which rose 10-40% in the week gone by. Including PVR, JSW Steel, IFB Industries, Divis Laboratories, GMM Pfaudler, Bharat Forge, Ashok Leyland, and eClerx Services.

Overcome small & midcaps! Over 40 stocks in the BSE 500 rose 10-40% in just 5 days

The Indian market started the week with a positive note, but sharp sales in the second half of this week were mostly due to rising US-China tensions, the possibility of a rate cut from the Reserve Bank of India (RBI) in 2020, and muted earnings upside.

“Markets opened on a positive note at the start of the week but did not have any clear headway. Indices saw a sharp selloff led by financials in the second half on Friday on signs of escalating US-China tensions. Profit booking was witnessed as investors turned cautious, although this could just be a correction in the recent rally,” Umesh Mehta, Head of Research, Samco Group said.

“Foreign Investors are positive on the India story for a long term horizon and retail investors are moving towards broader markets, which were undervalued, rather than rushing towards the already bloated large caps. This is leading to the outperformance in mid & small caps compared to Nifty50 by 2-2.5%,” he said.

Mehta said investors should ideally wait for a good correction before buying, while traders should pursue a stock-specific approach and not fall into volatile overbought stocks for quick earnings.

By sector, the move saw the S&P BSE Capital Goods Index rise 6.1 percent, followed by S&P BSE Industrial (about 5%), and metals (3.5%).

Experts believe that the news flow is, positively correlate with some sectors. That attracted strong buying interest during the week amid generalization expectations in the economy.

All economy-related sectors like Auto, Industrials, and Capital goods are coming into investor’s radar. As there is an expectation of normalization of the economy around year-end. The first half of next year,” Sacchitanand Uttekar – DVP – Technical (Equity), Tradebulls Securities said.
“The talks of progress in the vaccine for Covid-19 are increasing positive sentiment among market participants. Any pickup in demand will lead to earnings recovery. We may see many of the stocks in these sectors getting re-rating down the line,” he said.

Technical View:

The Nifty set a bearish candle on the daily charts on Friday and a spinning top type on the weekly charts. The long negative candle formed on Friday. This indicates the difficulty of recent lateral range movement. This model is the start of booking profits from peaks in the signal market.

As long as analysts are trading below the Nifty 11200 levels. The possibility of booking more profits cannot ruled out. Critical support is keeping the 11,000-11,950 level.

“The positive sequential movement like higher tops and bottoms continued in the market. The recent swing high of 11373 of 11th Aug could now be considered as a new higher top of the sequence. Hence, one may expect further weakness in the short term. ” Nagaraj Shetti, Technical Research Analyst, HDFC Securities said.

“The previous market action during higher bottom formations have consumed two days of decline. After downside breakout/reversal from the highs (for two occasions – mid of July and early Aug 2020). As per this pattern, one may expect another 2-3 sessions of weakness. Before showing any upside bounce again from the lows,” he said.

Before showing any upside bounce from low. Shetty believes the key low supports to look around in the next few sessions are around 11000-10950. While the up resistance is keeping 11400-11500 levels.

Disclaimer: 

The above report is compiled from information available on public platforms. Stockinvestor advises users to check with certified experts before taking any investment decisions.

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