Markets to open positive as analysts see consolidation ahead

KS Badri Narayanan Chennai August 11 | Updated on August 12, 2021

Eyes on mid and small-cap indices following BSE circular

Indian benchmarks are likely to open positive on Wednesday thanks to global cues. However, the larger market (mid and small-cap stocks) is likely to remain under selling pressure on Wednesday too. According to analysts, it’s a healthy correction in the mid- and small-cap space, which has risen sharply in recent times. Even headline benchmarks may come under pressure as the market lacks fresh triggers for bullish momentum, they added.

“The Nifty has closed in a narrow band of 16,238-16,280 over the last five sessions suggesting a tug-of-war between bulls and bears as far as the index heavyweights are concerned, although the broader market continues to bleed. We expect Nifty to break-out upwards of this band (though mildly) before seeing a larger correction,” said Deepak Jasani, Head of Retail Research, HDFC Securities


The SGX Nifty at 16,316 (8 am IST) signals a gap-up opening of about 50 points, as Nifty futures on Tuesday closed at 16,276.95.

The US indices ended at a new peak as the US Senate passed a $1-trillion infrastructure bill. The Dow and S&P 500 closed 0.46 per cent and 0.10 per cent higher, while the tech-heavy Nasdaq slipped 0.5 per cent. Asian markets largely gave a positive signal with Japan, Australia, Thailand, Malaysia and Hong Kong opening in the green. However, weakness continued in Korea and Taiwan.

Sell-off in small-caps

The major reason for the heavy correction in the mid and small-cap space is due to a new framework proposed by BSE. According to a BSE circular, a stock that is priced at Rs 100 and is already in the 10 per cent circuit filter can rise by just Rs 30 in a week and Rs 100 in three months. Similarly, a stock priced at Rs 100 can fall by Rs 25 in a week and Rs 50 in three months. It has spelt out several such caps with regard to stocks that attract circuit filters between 2 to 20 per cent.

The advances-declines ratio was the lowest since December 23, 2020. The S&P BSE MidCap index slipped nearly 1 per cent and the S&P BSE SmallCap shed over 2 per cent.

According to Rahul Sharma, Co- Founder, Equity99, a small correction or cyclic profit-booking will surely hit the market, but the Indian market is clearly going to outshine in the coming days. Investors don't need to panic; stocks with strong fundamentals still have huge potential and will definitely perform well in the coming days. This sell-off is very much temporary and will be treated as an opportunity for averaging good stocks in the coming days.

“New entrants who have joined the stock market in the last 15 months should change their mindset of gaining each and every day, the dream run or the honeymoon period is over and going ahead, the journey will be very rough; only those who have patience will sustain in the market,” he added.

Result calendar

Aptech, Aries Agro, Ashiana Housing, Aster DM Healthcare, Antony Waste Handling Cell, Bajaj Electricals, Bannari Amman Sugars, Bata India, BF Utilities, Birla Cable, Bharat Road Network, Cadila Healthcare, CESC, CreditAccess Grameen, Cummins India, Endurance Technologies, Equitas Holdings, Force Motors, Greaves Cotton, HEG, IDFC, India Cement, Kolte-Patil Developers, Lemon Tree Hotels, Novartis India, Pidilite Industries, PNC Infratech, Rupa & Company, Take Solutions, VIP Industries, and VA Tech Wabag will release quarterly earnings on August 11.

Published on August 11, 2021

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