Indian stock market benchmark Sensex It gained over 300 points in early trade today while the broader markets saw a strong rally. BSE Midcap and Smallcap indices were up over 1.5% each. While the broader Nifty was trading close to 18,200. The Indian market has been under pressure for the last few days and some midcap and smallcap stocks have seen a big correction. Despite today’s rally, analysts remain cautious on some stocks, especially midcap and smallcap stocks, citing valuation concerns.
Nifty is up 1.52% for the past one month, while Nifty small-cap is down 1.11%. Nifty Midcap is down 8% from its peak. The 8% decline in the mid-cap space is not visible in the large-cap index as there has been resilience in stocks like RIL (10.4% weightage), ICICI Bank (7.2%) and HDFC (6.5%). And there are no valuation concerns in these stocks, as has been accumulated in many stocks in the mid- and small-cap space,” says VK Vijayakumar, chief investment strategist at Geojit Financial Services.
“The rally in many micro-cap and penny stocks has been completely irrational and is likely to end in misery for many retail investors chasing these ‘cats and dogs’. As the saying goes, “we will learn that”. Who is swimming naked only when the tide goes down, the broader markets are clear signs of the tide going down,” he said.
Mr Vijayakumar says the selling of FIIs is putting pressure on the overall markets. “FIIs are constantly selling in the market; they have sold ₹Equity of Rs 10300 crore in last 5 days in cash market. If this FII sell-off continues, it will be a huge pressure on the market.”
On Monday, Nifty managed to close above it even after breaking 18000 on intraday basis. “It is imperative that this continues as it is both psychological and technical support. For the upward trend to resume, Nifty would need to stabilize above 18350. Even if the current trend remains positive, the markets will be gauged. Before taking a directional call,” said Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments.
Tech Mahindra was the top gainer in the Sensex pack, rising over 6 per cent, when the software exporter reported a 26 per cent rise in its net worth in the September quarter. ₹1,338.7 crore. Bharti Airtel, Bajaj Finance, Tata Steel, L&T, ITC and SBI were also trading with gains.
Foreign Institutional Investors (FIIs) were net sellers in the capital market, as they sold shares worth ₹2,459.10 crore on Monday, according to exchange data.
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