2 min read.Updated: 25 Oct 2021, 06:09 PM ISTLivemint( with inputs from Livemint )
Analysts say the fall in smallcap and midcap stocks indicated retreating flows from retail investors after getting caught in a correction last week amid fears of higher valuations.
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Indian stock market indices Sensex and Nifty ended higher today, taking a breather after the recent fall. But the broader markets continued to suffer. The blue-chip NSE Nifty 50 index ended up 0.06% at 18,125.40, while the benchmark S&P BSE Sensex rose 0.2% to 60,967. Banking stocks were in focus with private sector lender ICICI Bank rising as much as 14.2%, helping the Nifty bank index reach a fresh peak. Selling pressure continued on the broader front wherein midcap and smallcap indices lost in the range of 1.8%-2.3%.
The Nifty mid- and small-cap indexes fell more than 4% and 5%, respectively, last week. Analysts say the fall in small- and mid-cap stocks indicated retreating flows from retail investors after getting caught in a correction last week amid fears of higher valuations.
“We expect the banking pack to remain in focus as Axis Bank and Kotak Bank will report their numbers on October 26. On the index front, Nifty should hold 17,950 levels for any rebound else profit taking would resume. Needless to say, the scheduled monthly expiry will keep the choppiness high across the board. Amid all, participants should continue with a cautious approach until we see some concrete sign of trend resumption," said Ajit Mishra, VP - Research, Religare Broking Ltd.
Today, the auto index and the IT sub-index fell 1.8% and 1.1%, respectively. Nomura today downgraded India equities to "neutral" from "overweight", citing unfavourable risk-reward due to higher valuations and said a number of positives appear to have been priced in.
"This outperformance is justified by the bank results so far and the trend may continue since there is valuation comfort in the banking segment in an otherwise overvalued market," said V K Vijayakumar, chief investment strategist at Geojit Financial Services.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, said: “We are of the view that the short-term structure is weak but a quick pullback rally is not ruled out if the index succeeds to trade 18000-18050 levels. Once again, 18050 could act as a sacrosanct support level for the day traders, and above the same, we can expect an extension of a pull back rally up to 18250-18310. On the flip side, below 18050 or below 20 days SMA, the uptrend would be vulnerable."
Deepak Jasani, Head of Retail Research, HDFC Securities, said Nifty has a chance to stabilize and bounce up though a broader market recovery seems a couple of days away.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities on today’s market performance, said," “The positive chart pattern of higher tops and bottoms is intact on the daily chart and Monday's swing low of 17968 could be considered as a new higher bottom of the sequence. But, we need confirmation of upmove in the subsequent session to call this as a higher bottom reversal." (With Agency Inputs)