Smallcap shines bright amid volatility! 30 stocks rose 10-40% in 5 days

The Indian market saw extreme volatility in the week gone by which was dominated by global cues as well as earnings. The S&P BSE Sensex managed to hold on to 36,000 while Nifty50 closed a shade below 10,800 levels.

The S&P BSE Sensex rallied by about 0.8 percent as compared to 0.05 percent gain seen in the S&P BSE Smallcap index and 0.2 percent rise in the S&P BSE Midcap index.

Even though the broader market underperformed benchmark indices for the week ended 11 January, there was plenty of action in select stocks in the small-cap space.

“Structurally, at the current juncture, the small-caps and mid-caps are trading around 5-7 percent below their longer-term moving averages (200-DMA). This is relative to a 2 percent divergence between the earnings and 200-DMA of the bellwether Nifty,” Pushkaraj Sham Kanitkar, AVP – Technical Research at GEPL Capital told Moneycontrol.

“The lack of volumes in these stocks, as mentioned in the above point clearly indicates to a genuine disinterest in the stocks,” he said.

Kanitkar further added that stocks with good fundamentals and growth prospects, maybe purchased in a staggered manner (or SIP) with a genuine long term view in mind (minimum 3 years of holding period).

Weekly Returns Jan 12

In the S&P BSE 500 index, as many as 7 stocks registered 10-20 percent rally in the week gone by which include names like Adani Transmission, AstraZeneca Pharma, KRBL, Linde India, Himachal Futuristic, and VA Tech Wabag.

Technical Outlook:

The Nifty50 rose 0.6 percent for the week ended January 11 and is moving in a narrow range. It is facing resistance around its 100-days moving average on the daily charts. The index is consolidating in a range of 10,950-10,600 levels.

Investors should stay cautious and wait for the index to breakout above 10,950 levels before going long on the index while on the downside 10,700-10,628 will act as important support for the index.

“On the weekly charts, the index has formed a higher base which is structurally positive and need to see a bullish breakout above the 10,950 resistance zone for any bullish momentum,” Manav Chopra, CMT, Head Research- Equity, Indiabulls Ventures Ltd told Moneycontrol.”The Nifty has formed multiple bullish reversal candlestick at the support zone which has kept the bulls interested. A decisive move above 10,950 would be a bullish sign and will take the index higher towards 11,350-11,600 zones,” he said.