26 Oct , 2021 By : Kanchan Joshi
Indian stock market benchmark Sensex today surged over 300 points in early trade while broader markets saw stronger rebound. The BSE midcap and smallcap indices were up over 1.5?ch. While the broader Nifty was trading near 18,200. Indian markets have been under pressure over past few days with some midcap and smallcap stocks seeing a big correction. Despite today's rebound, analysts remain remain cautious on some stocks, particularly in the midcap and smallcap space, citing valuation concerns.
“While Nifty is up 1.52 % for the last one month, Nifty Small-cap is down 1.11%. Nifty Mid-cap is down 8% from its peak. The 8% correction in the mid-cap space is not getting reflected in the large-cap indices since stocks like RIL (10.4% weightage) ICICI Bank (7.2%) and HDFC (6.5%) have been resilient. And there are no valuation concerns in these stocks unlike the froth that has been accumulating in many stocks in the mid and small-cap space," says V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
"The run up in many micro-caps and penny stocks has been totally irrational and likely to end in grief for many retail investors chasing these 'cats and dogs'. As the saying goes, " we will know who all have been swimming naked only when the tide recedes." There are clear signs of the broader market tide receding," he added.
Mr Vijayakumar says the selling from FIIs remains a drag on the overall markets. “FIIs are continuously selling in the market; they have sold Rs10300 cr worth equity in the last 5 days in the cash market. If this FII selling sustains that would be a major drag on the market," he said.
On Monday, the Nifty despite breaking 18000 on an intraday basis, still managed to close above it. "It is imperative this continues to happen as it is both psychological and technical support. In order to resume the uptrend, the Nifty would need to stabilize above 18350. Even though the current trend continues to remain positive, it is advisable to gauge the markets before taking a directional call," said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
Tech Mahindra was the top gainer in the Sensex pack, rallying over 6 per cent, after the software exporter reported a 26 per cent increase in its September quarter net at Rs1,338.7 crore. Bharti Airtel, Bajaj Finance, Tata Steel, L&T, ITC and SBI were also trading with gains.
Foreign institutional investors (FIIs) were net sellers in the capital market, as they offloaded shares worth Rs2,459.10 crore on Monday, as per exchange data.
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