Smallcap rally fizzles out! Only 38 double-digit weekly gainers as India-Pakistan tensions escalate

Synopsis

The smallcap rally cooled sharply last week, with only 38 stocks delivering double-digit gains, down from over 100 earlier. Profit booking and cautious sentiment dominated. Analysts expect stock-specific action ahead amid earnings season. Technical indicators suggest caution, while long-term investors are advised to accumulate on dips.

The smallcap rally, which saw over 100 stocks delivering double-digit returns in the previous week, lost momentum sharply in the week gone by as only 38 stocks managed to clock double-digit gains. Analysts attribute this to profit booking set in after the recent sharp run-up.

Rajratan Global Wire topped the smallcap gainers list with a 32% weekly gain, followed by Thyrocare Technologies (27.5%), Best Agrolife (27.4%), Peninsula Land (26.8%), and Carraro India (26.2%).

Nearly 30 smallcaps, including Manorama Industries, Tanfac Industries, Mufin Green Finance, Butterfly Gandhimathi, and Welspun Specialty Solutions, delivered healthy weekly gains in the 10–20% range.

In the midcap space, AU Small Finance Bank was the top performer, gaining 15%, followed by Tata Elxsi (14.5%), Coforge (12.1%) and Mphasis (11.6%).

Among Sensex constituents, Tech Mahindra led the pack with an 11.9% gain, followed by HCL Technologies (9.8%) and Mahindra & Mahindra (6.8%).

The sharp cooling in the number of double-digit gainers highlights that smallcap sentiment has turned cautious after last week's euphoria, with investors becoming more selective ahead of the earnings-heavy weeks ahead.

What happens next?

Looking ahead, analysts expect stock-specific action to dominate with earnings season picking up pace. Foreign investors are likely to be on a wait-and-watch approach in the near term to overview the geopolitical tension.

"However, India has historically shown resilience during such periods given the buoyant nature of its domestic economy. For long-term investors, it is fair to take this as an opportunity to accumulate quality stocks/sectors during further dips for long-term gains," said Vinod Nair, Head of Research, Geojit Financial Services.

On the technical front, analysts say caution remains the need of the hour.

"Nifty has slipped after a consolidation on the daily chart, indicating a rise in bearish sentiment. Additionally, the index has fallen below its 200-DMA, signaling a potential re-entry into a bearish trend. Support is placed at 23800/23515 levels," said Rupak De, Senior Technical Analyst at LKP Securities.

With data inputs from Ritesh Presswala

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times.)

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