Carnage in mid & small-caps ahead of Budget; 30 stocks slip 10-30% in a week The mid and the small-caps, which were big underperformers of 2018, continued their southward journey in the first month of 2019 and ahead of the big event, Interim Budget 2019.

Kshitij Anand moneycontrolnews

As the countdown begins for the Interim Budget 2019, it looks like the D-Street is experiencing some nervousness especially the mid and the small-caps, which underperformed benchmark indices for yet another week.

The S&P BSE Sensex and the Nifty50 were down by about 1 percent for the week ended January 25, compared to 3.4 percent fall seen in the S&P BSE Small-cap index, and 2.2 percent drop recorded in the S&P BSE Mid-cap index.The mid and the small-caps, which were big underperformers of 2018, continued their southward journey in the first month of 2019 and ahead of the big event, Interim Budget 2019.The S&P BSE 500 index which slipped 1.5 percent for the week ended January 25 saw as many as 31 stocks slipping 10-30 percent in just 5 trading sessions.

Stocks which fell in double digits include names like Jet Airways, Maruti Suzuki, DLF, Union Bank of India, ICICI Prudential, Graphite India, HEG, ZEE Entertainment, and Dish TV.

As many as 56 stocks in the BSE 500 index hit a fresh 52-week low which include names like Deepak Fertilisers, Ashok Leyland, Birla Corp, M&M, Dena Bank, Maruti Suzuki, SAIL, Tata Steel, Coal India, Sun TV, Oil India, Cipla, Eicher Motors, Sun Pharma, and SPARC among others.

"We may see some buying in that stock which are hitting 52 weeks low but that doesn't indicate any change in trend on an immediate basis. As since last many days, volume has been taking an active part with the downfall in the prices, which is nothing but the accentuated selling pressure due to some negative fundaments or purely based on technical," Sumeet Bagadia, Executive Director, Choice Broking told Moneycontrol.

"So whenever this type of picture happens, it normally leads to further southward movement along with some risk-taking buyers who want to hold their position for long term basis," he said.So what should investors do? Bagadia says that for a shorter time, one should wait to let absorb all selling pressure and let the stock form bottom. Until then, wait with your loaded gun to hunt prey, which will give you handsome returns in meantime.

Technical Outlook for markets:

The Nifty50 slipped by over 1 percent for the week ended January 25. The index closed below its crucial short and long term moving averages and its crucial support placed at 10800.The Nifty50 is likely to face stiff resistance around 11,000 while if the index trades consistently below 10,850 then further correction towards 10,700 levels.

The Nifty index opened positive but failed to hold 10,950 zones and drifted sharply towards 10,756-mark in the second half of the session. It formed a Bearish Candle on the daily and weekly scale that suggests supply is visible at higher levels.

India VIX moved up by 1.49 percent at 17.69 levels. Volatility has to cool down below 16 zones to get a decisive range breakout. Bank Nifty broke its consolidation band of 27,150-27,200 zones and extend its weakness towards 27,050 levels."Till it holds below 10,850 zones, it can slip towards 10,700 then 10,650 zones while on the upside major hurdle is seen at 10,880- 10,929 zones," Chandan Taparia, Associate Vice President, Analyst-Derivatives, Motilal Oswal Financial Services told Moneycontrol.

On the options front, maximum Put OI is at 10,800 followed by 10,700 strikes while maximum Call OI is at 11,000 followed by 10,900 strikes.Meaningful Call writing was seen at 10,800 followed by 10,900 strikes while Put unwinding is seen at all immediate strike price. Option band signifies a lower trading range in between 10,700 to 10,900 zones.

First Published on Jan 26, 2019 08:54 am