Indian stock market | A change in the texture, large caps are on charge: Geojit's Vinod Nair
The
US Federal Reserve's unexpected 50 bps rate cut and its shift in policy are boosting the emerging markets. After the event, it was highly expected to do so in anticipation of an influx of FII inflows. There is courtesy of the dollar to depreciate and EMs currency to appreciate as the dollar interest rate starts to reduce Typically, this reallocation of funds to emerging markets is driven by forecasts of a slowdown in developed economies.
However, in this instance, the primary factor is not an expected economic slowdown but rather the relatively high valuation of dollar-based markets compared to emerging markets. The consensus suggests that the developed economies will likely experience a soft landing rather than a significant downturn.
In the current emerging markets rally, India is lagging behind its Asian counterparts. Since September 18, MSCI India is up by 2.9 per cent, MSCI-China is up by 16.1 per cent, and MSCI-EM is up by 6.9 per cent. Despite that, the liquidity from FIIs is providing a push to the domestic momentum.
Domestic benchmarks have breached new highs. However, this rally differs from previous ones as large-cap stocks are leading the charge, while mid-and small-cap stocks are lagging, with small-cap stocks showing the most negative bias.
We can expect this change in India's trend to underperform other emerging markets and the better performance of the domestic large caps to mid & small caps to continue in the short to medium term. This is because India has long been trading at a premium valuation to EMs.
This is in contrast to the market trend of the last five years. The last one-year Nifty100 is up by 39 per cent, while mid and small caps are 49 per cent and 52 per cent, respectively, marginally better. Compared to the last five years, it was 133 per cent, 272 per cent, and 240 per cent, respectively. Mid and small caps, on average, outperformed large caps by two times
Similarly, domestic Midcaps have been trading to large caps at a premium, which stands at a historic peak of 55 per cent. Large caps are better placed to handle the global slowdown, as indicated by the super accommodative Fed’s September policy. Additionally, FII inflows are currently more concentrated in large-cap than mid-cap stocks, further supporting this trend.
The market still believes earnings growth will recover. The sharp correction in international commodity prices indicates that the world’s demand is in contract. Though this is a net positive for India, it will negatively impact commodity players while benefiting the majority of the economy as a net user/importer of materials
While the Q1 slowdown was attributed to reduced government spending during the national elections, it may be premature to draw definitive conclusions. The slowdown is evident across multiple sectors, suggesting that the issue may go beyond temporary or technical factors.
However, if world demand slows across the category, it will affect growth, making it difficult for India to maintain the premium valuation in the short to medium term. Finally, for the mid-and small caps to slow down, we need to see a reduction in retail inflows directly and through MFs. This will happen only if new and retail investors incur losses, as many have remained insulated since the pandemic.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
Trapped in bureaucracy: The ordeal of recovering unclaimed shares in India
Document preparation aside, the way companies and IEPF take all the time in the world with their archaic process and speed post communication is disturbing. My 83-year-old mother had to sign on hundreds of physical documents," says Ghaziabad-based Awasthy, who is still waiting for the transfer of a few remaining dividends, with only a couple of shares left to be transmitted.
Buy or sell: ONGC to Syrma SGS Tech—Ganesh Dongre recommends three stocks for Monday
The
Nifty 50 index concluded the week at 26,178, settling comfortably above the anticipated resistance zone 26,000. At the start of the week, the index moved above 25500 and
concluded the week above 26,000. The consistent close above the key support level of 25,500 suggests that the bullish trend may persist, with the potential to test resistance levels in the range of 26,500.
Weekly Trading Overview:
The week commenced with a gap-up opening on Monday when the index approached the resistance level of 26,000. The weekly trading pattern included various index stock-specific movements, keeping the Nifty within a trading range of 25500 to 26,500. Technically, the Nifty is currently in the overbought zone. Looking ahead to next week, key support levels are projected to be around 25,500, while resistance is anticipated near 26,600.
Bank Nifty Performance:
The Bank Nifty also experienced a gap-up opening on Monday and attempted to reach the resistance level 55,000. However, by the end of the week, it relinquished its gains and closed below the 54,000 support level
Stocks to buy on Monday
Ganesh Dongre, Senior Manager - Technical Research at Anand Rathi recommends three stocks to buy on Monday, September 30
1.Buy ONGC at ₹296.. Stoploss…285 Target..320
Document preparation aside, the way companies and IEPF take all the time in the world with their archaic process and speed post communication is disturbing. My 83-year-old mother had to sign on hundreds of physical documents," says Ghaziabad-based Awasthy, who is still waiting for the transfer of a few remaining dividends, with only a couple of shares left to be transmitted.
Mcap of top 8 most valued firms surges ₹1.21 lakh crore; Reliance Industries biggest winner among top 10 companies
Reliance Industries Ltd (RIL) retained the highest ranking in the chart of the most valued firms, followed by TCS, HDFC Bank, Bharti Airtel, ICICI Bank, Infosys, State Bank of India, Hindustan Unilever, ITC and LIC. Mukesh Ambani-led RIL's mcap jumped
₹53,652.92 crore to
₹20,65,197.60 crore.
Mcap of top 10 most valued Indian companies
State Bank of India added ₹18,518.57 crore, taking its valuation to ₹7,16,333.98 crore. Bharti Airtel's market valuation soared ₹13,094.52 crore to ₹9,87,904.63 crore and that of ITC grew by ₹9,927.3 crore to ₹6,53,834.72 crore. The market capitalisation (mcap) of Tata Consultancy Services (TCS) surged ₹8,592.96 crore to ₹15,59,052 crore.
HDFC Bank's valuation climbed ₹8,581.64 crore to ₹13,37,186.93 crore and that of Life Insurance Corporation of India (LIC) zoomed ₹8,443.87 crore to ₹6,47,616.51 crore. The mcap of Infosys went up by ₹459.05 crore to ₹7,91,897.44 crore. However, the market valuation of ICICI Bank tumbled ₹23,706.16 crore to ₹9,20,520.72 crore. The mcap of Hindustan Unilever declined by ₹3,195.44 crore to ₹6,96,888.77
Stock market review: How Sensex, Nifty performed last week
As the new month begins, investors will closely monitor key market triggers such as domestic and global macroeconomic data, auto sales data, second-quarter corporate updates, market watchdog's board meeting, primary market action, foreign fund inflows, crude oil prices, and global cues. Investors will see intense action in the domestic and corporate sectors in the first week of October.
After a strong start, the benchmark indices moved within a narrow range during the initial sessions. However, a sharp rally on Thursday allowed the indices to resume their uptrend. The continued optimism in the US markets and China’s newly announced stimulus measures contributed to the positive sentiment.
Also Read: Upcoming IPOs: 3 new public issues, 12 listings to keep primary market buzzing this week; Full list here
The Nifty 50 rose by 0.23 per cent, reaching a fresh all-time high of 26,277 during Friday's trade before closing with a 0.14 per cent drop at 26,199. Notably, this marked the third straight session where the NSE index closed above the crucial psychological level of 26,000.
Nifty consolidated on the last day after witnessing a run-up above 26k during the week. We expect the positive momentum to continue in the market driven by frontline stocks. While on the sectorial front, the focus could shift towards IT & Banking space as companies would release their pre-quarterly updates next week. Auto Sector will also be in focus next week as OEMs will announce their monthly sales data,” said Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd.
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