Despite a subdued beginning to the week, Indian equity markets continued their resilient rally, unlike other Asian peers, buoyed by weaker-than-expected inflation data from the US.
Largecaps gained traction during the week, with mid and small caps seeing some profit booking, driven by valuation gaps.
The number of smallcap stocks that rose in double digits came down for the second consecutive week. Fifty of them saw double-digit rallies, compared with 52 a week earlier and 60-plus in the preceding week.
Jubilant Industries was the top gainer in the smallcap pack with a 55% return, followed by Mangalore Refinery (27%), Force Motors (26%), and Shaily Engineering (22%).
About 5 stocks, which is a significant dip from the previous week, have offered returns between 20-25% during the week. Among these were Natco Pharma, Time Technoplast, 63 Moons, HPL Electric and Power and others.
In the midcap segment, only three stocks including Federal Bank and Oil India have risen in double digits. While Federal Bank gained 11.7%, Oil India added 11.3%.
From 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, heavy buying in the banking sector helped broader indices inch towards new heights, countering the subdued beginning of the week characterised by concerns over elevated valuations and higher exchange margin requirements.
The Indian auto sector too had a strong week, lifted by anticipated high demand and a favourable earnings outlook. PSU Banks, benefiting from improved asset quality and the government’s focus on fiscal prudence, are attracting investors.
What should investors do?
Looking ahead, analysts said correction in PSU banks seems likely due to higher valuation risks.
“Sectors such as metals, FMCG, and capital goods are anticipated to gain momentum driven by robust construction demand, an order backlog, rural revival prospects, and India’s narrowing trade deficit. This is boosted by softer commodity prices and government-led manufacturing initiatives,” said Vinod Nair, Head of Research, Geojit Financial Services.
“We expect market sentiment to strengthen further as the prospect of a pre-election rally is quite strong. Two important pre-poll surveys by India Today and Times Now predict a more than comfortable majority (272+ seats) for the incumbent BJP-led NDA. Nifty is hovering near all-time zones and is all set to make new highs next week,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal.
Technically, the index looks set to test record-high levels next week.
“Traders should keep a close watch on the banking index for cues while others may continue to play a supportive role on a rotational basis. Besides, the performance of the global indices, especially the US, will remain on their radar,” said Ajit Mishra of Religare Broking
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)
