Over 45 smallcap stocks gain 10-40% as Sensex snaps 2-week losing streak; do you own?

While geopolitical risks on the Israel-Hamas war persist, they have had limited impact on the market’s overall trajectory. The resilience of the global markets will be crucial in determining the sustainability of the positive momentum, according to analysts.

After a positive start, frontline indices edged lower in the middle, however recovery in US markets and easing crude oil prices helped markets to regain some momentum in the final sessions.

On a cumulative basis, the BSE benchmark jumped 580.98 points or 0.91 per cent while the Nifty climbed 183.35 points or 0.96 per cent. Analysts cited healthy earnings, easing inflation, steady demand and a stable interest rate outlook as factors driving growth in domestic markets.

Market Performance

On Friday, domestic equity benchmarks Nifty 50 and Sensex ended higher for the second consecutive session amid positive global cues as the risk appetite of investors improved on hopes that the end of monetary policy tightening is near.

Nifty 50 closed at 19,230.60, up 97 points, or 0.51 per cent and Sensex closed at 64,363.78, up 283 points, or 0.44 per cent. In the broader market, the BSE smallcap gauge jumped 0.94 per cent while the midcap index climbed 0.71 per cent. 

The world’s major central banks, including the US Federal Reserve, the Bank of England and the European Central Bank, left rates unchanged this month, fuelling hopes that interest rates have peaked. Apart from optimism around the likely end of monetary tightening, the domestic market is also witnessing buying because of some valuation comfort after the recent correction. 

Also Read: FPIs begin November on subdued note, offload ₹3,412 crore in Indian equities; When will buying resume?

“The optimism is buoyed by firm global clues, steady macroeconomic data and strong domestic corporate earnings. Clues that Fed is unlikely to hike rates in the future and modest decline in oil prices are adding to the optimism,” said Vinod Nair, Head of Research at Geojit Financial Services.

IT stocks rose 0.64 per cent, extending gains after the Fed held rates steady on Wednesday with a less hawkish monetary policy stance. IT companies earn a significant share of their revenue from the US.

“India will likely attract a lion’s share of foreign inflows into emerging markets if buying re-emerges after the Fed rate pause, due to its growth potential,” said Mayuresh Joshi, head of equity research at William O’Neil India.

On the stock-specific front, 49 smallcap stocks logged gains in the range of 10 per cent – 40 per cent last week, outperforming the index. Arvind, Centrum  Capital, Jaiprakash Power, Triveni Turbine, Shalby, Jindal Saw, DB Realty, Orient Green Power, Thomas Cook India, Angel Broking, Phoenix Mill, Tega Industries, Omaxe, are among the smallcaps that logged a double-digit rise in their share prices last week.

Where are markets headed?

Market expects noted that the ongoing Q2 results explore healthy expansion in Indian operating margin, leading to a strong bounce in earnings growth. In the midst of the earnings season, large cap companies indicate a solid 40 per cent growth in PAT on a YoY basis. Nifty has penetrated the resistance zone after two days of advance and tested the immediate hurdle of 100 EMA around 19,276 as well.

 ‘’We reiterate a cautious view on the index and suggest awaiting a decisive break above 19,400 for a sustained recovery else the up move would fizzle out. However, there is no shortage of stock-specific opportunities so traders should maintain their focus on stock selection,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Updated: 04 Nov 2023, 09:37 PM IST