Indian equities bounced back with venom in the holiday-shortened week, which had just three trading sessions. The rally was mainly driven by the pause in reciprocal tariffs by US President Donald Trump. During the week, the benchmark Sensex gained over 4% and the resurgence spread even into the broader market. The surge in small caps comes as a relief to many investors, who have been sitting on heavy losses due to the correction and which have been reeling under the pressure for months before Trump hit a pause on tariffs.
The BSE Smallcap 250 index rose 4.2%, as a result of this, in one of the rare instances this year, over 100 smallcap stocks logged double-digit weekly gains. Seven of them offered returns of over 20%. Mercury Ev-Tech (29%) was the top gainer in the smallcap pack, followed by Cupid (23%), Goldiam International (21%) and Shaily Engineering Plastics (21%).
In the mid-cap segment about 7 stocks gained in double-digits with Emcure Pharmaceuticals, Delhivery and Indian Renewable Energy Development Agency (IREDA) as the leaders.
Almost all the Sensex components gained in the week. IndusInd Bank led the pack with 15% rise in just three days. This was followed by another private lender Axis Bank, whose shares rose 11%.
Bank stocks overall were among the top gainers as the rebound was supported by a favourable monetary environment and a reduction in deposit rates by major lenders. This is expected to enhance margins and benefit banking stocks. Amid global uncertainties, analysts say banking names remain a preferred investment choice.
During the week, foreign institutional investors (FIIs) returned to Indian equities with strong buying as they pumped in nearly Rs 15,000 crore. The forecast of an above-normal monsoon also contributed to the market's outperformance relative to other emerging economies.
The strong surge in equities meant that India has emerged as the first major market to fully recover from the losses triggered by the US tariff announcements earlier this month. Investor sentiment was buoyed by expectations that the US-China trade dispute may not harm, but rather benefit, India.
What happens next?
Analysts said the current domestic macroeconomic environment remains supportive, encouraging investors to increase their exposure to riskier assets for the long term. "Additionally, the inflation outlook appears favorable, reinforced by forecasts of an above-normal monsoon and a decline in oil prices," said Vinod Nair, Head of Research, Geojit Investments.
Going forward, earnings will be in focus. The expectations are that the fourth quarter will likely be insipid due to muted demand and margin pressures.
"Investors are advised to adopt a cautious stance, particularly with export-oriented stocks, and instead focus on pure domestic themes such as banking, consumer goods, healthcare, transportation, and infrastructure," Nair added.
( Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
The BSE Smallcap 250 index rose 4.2%, as a result of this, in one of the rare instances this year, over 100 smallcap stocks logged double-digit weekly gains. Seven of them offered returns of over 20%. Mercury Ev-Tech (29%) was the top gainer in the smallcap pack, followed by Cupid (23%), Goldiam International (21%) and Shaily Engineering Plastics (21%).
In the mid-cap segment about 7 stocks gained in double-digits with Emcure Pharmaceuticals, Delhivery and Indian Renewable Energy Development Agency (IREDA) as the leaders.
Almost all the Sensex components gained in the week. IndusInd Bank led the pack with 15% rise in just three days. This was followed by another private lender Axis Bank, whose shares rose 11%.
Bank stocks overall were among the top gainers as the rebound was supported by a favourable monetary environment and a reduction in deposit rates by major lenders. This is expected to enhance margins and benefit banking stocks. Amid global uncertainties, analysts say banking names remain a preferred investment choice.
During the week, foreign institutional investors (FIIs) returned to Indian equities with strong buying as they pumped in nearly Rs 15,000 crore. The forecast of an above-normal monsoon also contributed to the market's outperformance relative to other emerging economies.
The strong surge in equities meant that India has emerged as the first major market to fully recover from the losses triggered by the US tariff announcements earlier this month. Investor sentiment was buoyed by expectations that the US-China trade dispute may not harm, but rather benefit, India.
What happens next?
Analysts said the current domestic macroeconomic environment remains supportive, encouraging investors to increase their exposure to riskier assets for the long term. "Additionally, the inflation outlook appears favorable, reinforced by forecasts of an above-normal monsoon and a decline in oil prices," said Vinod Nair, Head of Research, Geojit Investments.
Going forward, earnings will be in focus. The expectations are that the fourth quarter will likely be insipid due to muted demand and margin pressures.
"Investors are advised to adopt a cautious stance, particularly with export-oriented stocks, and instead focus on pure domestic themes such as banking, consumer goods, healthcare, transportation, and infrastructure," Nair added.
( 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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