While smallcaps remained under pressure for most of the week, a late rally helped offset deeper losses. As a result, weekly returns were mixed with few stocks posting double-digit gains, and at the same time sharp declines were also limited. About 10 stocks during the week gave double-digit returns, while 17 were on the other extreme, falling in double-digits.
Sectors like IT, metals, and capital goods saw a relief rally in expectation of an improvement in the near-term outlook.
In the mid-cap space, none of the stocks offered double-digit returns. Dixon Technologies (India), PI Industries and Gujarat Gas led the gains. Among the Sensex pack, Hindustan Unilever, Titan Company, Nestle India and Power Grid Corp were leading from the front.
Going forward, the intensity of the US-China trade war will be crucially viewed by the market, which can have the potential to offset the impact of the current pause on trade tariffs on other emerging markets.
On the other hand, the market has entered the result season with a subdued expectation. The initial results from the IT major TCS acknowledged the impact of trade tensions and expects a delay in discretionary spending.
What’s in store ahead?
Notwithstanding a reprieve, the focus, moving forward will be on the outcome of the ongoing bilateral trade negotiations between India and the US, which will add more colour to the trade potential of the domestic market.
“The supportive domestic environment with an ease in interest rates and a benign inflation trajectory is encouraging investors to have a balanced portfolio to aid for a better risk-reward in the long term,” said Vinod Nair, Head of Research, Geojit Investments.
Looking ahead, analysts expect inflation is likely to moderate further on account of cooling food prices and would give room for RBI to remain accommodative. “We expect caution is likely to prevail due to the holiday-led truncated week,” said Nair.
Technically, the trend appears bearish unless it decisively moves above 23,000, where significant open interest has been added.
“On the downside, support is placed at 22,750; a break below this level could intensify the bearish sentiment. Conversely, a decisive move above 23,000 may trigger a rally towards 23,500, as suggested by the positive divergence in the RSI,” said Rupak De, Senior Technical Analyst at LKP Securities.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
