After touching a fresh high record this week due to pressure on small and medium stocks, the market broke the trend of two consecutive weeks of bullishness and closed with a fall amid heavy volatility. Last week, the BSE Sensex closed at 60,821.62 with a fall of 484.33 points, or 0.79 per cent. On the other hand, Nifty closed at 18,114.9, down 223.65 points, or 1.21 percent.
Last week, the BSE Midcap index and Smallcap index declined 4 and 5 per cent, respectively, due to more beating of small and medium-cap stocks compared to giants. If we look at the small cap, there were about 100 stocks, in which there was a decline of 10-22 percent. This includes stocks like REI Infrastructure Finance, DCM Shriram, MEP Infrastructure Developers, Balaji Amines, Angel Broking, Antony Waste Handling Cell, Balrampur Chini Mills, NLC India and Panacea Biotec.
On the other hand, there were 21 small cap stocks, which saw a rise of 10-40 percent. This includes the names of Rail Vikas Nigam, IRB Infrastructure Developers, Vishwaraj Sugar Industries, Jindal Worldwide and Transport Corporation of India.
Vinod Nair of Geojit Financial Services says that despite a good start last week, the market went into the hands of the bears due to profit recovery and saw a decline in 4 trading sessions. The recent fall in the market is not an over reaction but a correction due to heavy valuations. This sequence may continue further. Apart from this, heavy volatility in the domestic market led to selloff in both domestic and foreign funds. We have seen selloffs in stocks whose valuations have gone up and these valuations do not seem to be correct on the fundamentals basis.
Apart from this, weaker than expected results for the second quarter are also showing their effect on the market sentiments. However, the good news is that the market outlook looks strong from the long-term due to the reopening of the economy, due to the era of low interest rates and increasing investment from the private and public sector.
How will the market move ahead?
Yes Shah of Samco Securities says that next week the market may be seen struggling to find its footing. And can be seen doing business in a circle. After crossing the 40,000 level for the first time last week, Bank Nifty is likely to continue in the headlines next week as well. Meanwhile, many big banks are going to present their results.
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