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Euphoria ebbing? Number of smallcap stock gainers plunge 27% week-on-week

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While the benchmarks Sensex and Nifty 50 clocked losses for the fourth straight week, the broader market also lost some of its momentum as was visible in the stock performance. In the week gone by, 55 smallcap stocks gave double-digit positive weekly returns, as compared to 75 stocks a week ago.

In the BSE 500 index, 24 stocks had given double-digit returns in the week ended August 11, but this number was sharply down to six in the week ended August 18, data by Ace Equity showed.

Further, the number of laggards in the smallcap segment outnumbered gainers in the week gone by. As many as 543 stocks have given negative returns in the week ended August 18, compared to 485 in the week-ago period.

Market sentiment has been hit since the hawkish remarks on inflation by the Reserve Bank of India, and this got further dampened by the US Federal Reserve’s view that interest rates may need to harden further to bring down inflation.

With inflation concerns coming back, foreign investors seem to be moving their bets to bonds and haven asset, dollar.

On Thursday, the rupee ended at a record closing low of 83.1450 against the greenback. So far in August, the dollar index has net gained close to 2%.

The macro concerns has dampened the euphoria among bulls and this saw the Sensex and Nifty 50 end 0.3% down at 64848.66 points and 19310.15 points, respectively. Smallcap Gainers/Laggards

The top five gainers in the smallcap segment last week were Digispice Technologies, Garden Reach Shipbuilders, BF Utilities, Cochin Shipyard, and DB Realty. These stocks gained 25-43% in the week gone by, and also hit fresh 52-week highs.

Robust earnings have driven the gains in Cochin Shipyard. The company’s net profit more than doubled on year to Rs 109 crore.

Meanwhile, Authum Investment picking up a 1.9% stake in DB Realty for Rs 100 crore boosted the latter’s shares.

Among laggards, as many as 19 smallcap stocks gave double-digit negative returns in the last week.

Zee Media Corporation, Wockhardt, MM Forgings, Hindustan Copper, Kirloskar Brothers, GE Power India, Universal Cables, Rico Auto Industries, and Hindustan Oil Exploration declined 10-32%.

The steep losses in Hindustan Oil shares were due to disappointing earnings of the company. The company reported a steep 80% sequential drop in net profit for the quarter ended June. Further, the government hiked windfall gains tax on domestic crude by a whopping 67% to Rs 7,100 a tonne.

What should investors do?
The 4-week losing streak of benchmark indices is the longest seen since the February-March 2020 period. So, the short-term trajectory has turned negative, and movement of the dollar, and global markets will determine the trend for the week ahead.

“Nifty took support from the 50-DEMA of 19265 on the daily chart. A close below 19265 levels can further intensify the selling pressure and drag the index to 18600 levels,” said Ashwin Ramani, derivatives and technical analyst, SAMCO Securities.

On the contrary, a strong close above 19500 levels can revive the lost enthusiasm among buyers, Ramani said.

(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)

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