Weekly Market Research – Presented by Fintoo

• Markets erased gains of last week, Sensex & Nifty ended Down 1% each amid lack of domestic triggers.
• Rupee slipped to over 2-month low; down nearly 1% this week.
• Midcap index gained for 2nd straight week, up 0.5%.
• Nifty Bank index fell nearly 1.6% this week; HDFC Bank & Axis Bank were the top losers.
• On the sectoral front, Nifty Pharma index was the top gainer, up 3.3% while Nifty Metal index was the top loser, ended down 1.7 pct.
• Divi’s Lab, Dr Reddys, Cipla were Top Nifty Gainers. Shree Cement, Bajaj Finserv and HDFC Life were the top Nifty losers this week.
• FII remained net seller for most part of week and was main reason behind the pressure in large cap stocks.
• On the technical front, key support for Nifty is around 15620, below which we may see deeper cuts towards 15000. Key concern for market may come from surge in USDINR and rising Crude prices as it will have negative impact on financials and Indian bond market.

Automobile stocks were in focus as companies declared their monthly automobile numbers. Auto sales in Jun’21 recovered strongly from the low levels of last month, as the restrictions and lockdowns imposed to curb the spread of Covid-19 were eased gradually. Retail sales have bounced strongly, due to the pent-up demand. Auto industry has reported strong growth in dispatches (wholesale volumes) in Jun’21, over the previous month as well as over Jun’21. Bajaj Auto, TVS Motor, Tata Motors, Mahindra (Tractors) and Escorts reported better than expected sales volume for Jun’21. Maruti Suzuki and Ashok Leyland reported lower than estimated sales volumes.

Must Watch – What is SFT? Must watch before you file your ITR

• The mid and small cap indices, which lagged large caps until early 2020, have covered lost ground, gaining 73% and 104%, respectively, in the past one year.
• We are concerned over the steep run-up in mid and smallcap stocks (especially the euphoric rise in many poor-quality small cap names), which has shrunk the traditional discount available in the segment vis a vis large cap peers.
• The market is factoring in nearly 40% earnings growth for the current year and any disappointment in this regard will impact stock performance.
• Investors should also be aware that the volatility in this space is likely to be higher.
• Considering this, investments in small caps need to be done over a longer term horizon of 3-5 years.
• One should only invest in fundamentally sound companies

Disclaimer: The views shared in blogs are based on personal opinion and does not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Adviser before making any investment using the app. Making an investment using the app is the sole decision of the investor and the company or any of its communication cannot be held responsible for it.

Author: Nisha Harchekar – M.M.S (Finance) – 16 yrs+ experience as Equity Research Analyst