It seems investors are in no mood to let go of smallcap stocks despite elevated valuations. As many as 74 smallcaps delivered double-digit returns in the week gone by even as weak global cues dented overall market sentiments.
RVNL was the top gainer in the smallcap pack with nearly 58% return, followed by Ganesh Housing Corp (50.4), Ircon International (37%), and MSTC (35%).
About 16 stocks including ITDC, Salsar Techno, Global Surfaces, Kamdhenu, RailTel, IFCI among others have offered returns between 20-30% during the week.
In the midcap segment, nine stocks including IRFC, Oracle Financial Services, General Insurance among others have risen in double digits. While IRFC gained 56%, Oracle and General Insurance were up over 44% and 21%, respectively.
Among the Sensex pack, Tech Mahindra topped the charts with 6% returns, followed by Airtel at 4.3% and Wipro at 2.7%.
During the week, rising US bond yields and discouraging Chinese economic data contributed to the lackluster investor sentiment.
While the private banks’ bottom line aligned with market expectations, investors expressed disappointment due to the lesser-than-anticipated growth in deposits and the contraction observed in the net interest margins, analysts said.
What should investors do?
Next week will be a truncated week following with two stock market holidays on January 22 and January 26. Analysts expect the market to be driven largely by stock specific action as earnings season takes full swing.
Investors will also track some key interest rate decisions by the Bank of Japan and ECB, along with US GDP data which will likely have an influence on the global rate cut trajectory.
Foreign investors were heavy sellers in the past week amid concerns over persistent interest rates. It would be interesting to see the trend of foreign flows going forward, which will have a bearing on the overall market sentiment.
“Looking ahead, the interest rate decisions of the BoJ and ECB, along with US GDP data, are anticipated to drive market dynamics,” said Vinod Nair, Head of Research, Geojit Financial Services.
Technically, the short term trend of Nifty remains volatile.
“At the higher levels, the market could encounter strong overhead resistance around 21750-21850 levels and on the downside could find support around 21300 levels in the near term,” said Nagaraj Shetti of HDFC Securities.
(With data inputs from Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
