Mid-& Small-cap stocks’ pie in total mcap rises to 36%

Gaining pace

•  Small-cap index rose 1.5%
•  Profit booking amid concerns over poor monsoon
•  Nifty Bank gained for 6th week
•  FIIs turn net buyers
•  Budget-related sectors to remain in action

Ahead of the Union Budget and Q1 earnings season, benchmark indices posted minor gains, marking their third consecutive week of growth during the week ended. BSE Sensex added 217.13 points or 0.28 percent to end at 77,209.90 points, while NSE Nifty rose 35.5 points or 0.15 per cent to close at 23,501.10 points. On June 19, BSE Sensex touched fresh record high of 77,851.63 points, while NSE Nifty hit record high of 23,667.10 points on June 21. Nifty Bank index, in particular, stood out with its largest weekly gain of 2024, surging by more than three per cent. This impressive performance also signifies the Nifty Bank’s longest winning streak in 19 months, as it recorded gains for the sixth straight week. Exuberance in Small-Cap stocks saw the Small-cap index rise 1.5 percent. The share of mid- and small-cap stocks in the country’s total market capitalization was 36 per cent last month compared to 25 per cent in December 2020 and 20 per cent in December 2013.

During the week, FIIs bought equities worth of Rs2,030.83 crore, while DIIs also bought equities worth Rs6293.38 crore. FIIs seemed to have shrugged-off their selling trends of the last two months turning net buyers in the current month. However, these FII inflows are concentrated in a select few stocks rather than being widespread across the market or sectors. The Indian rupee ended flat at 83.54 on June 21 against its June 14 closing 83.56. Strong institutional inflows, including renewed interest from FIIs post-government formation, have further bolstered market sentiment.

However, profit booking emerged on concerns about the slow progress of the monsoon and heatwaves in northern India. With a coalition government in place, there is optimism that the upcoming Union Budget will strike a balance between growth initiatives and populist measures. Additionally, expectations are high for government actions aimed at stimulating consumption. The market is likely to remain steady and consolidate at higher levels in the near term.

Budget-related sectors are likely to remain in action on the back of news flow and expectation growth focus policy. Over the weekend, GST Council decided to tweak tax rates on items, including accommodation services for students and solar cookers, and took a host of taxpayer-friendly measures including waiver of interest and penalty for demand notices issued in the first three years of GST rollout.

In the US markets, the rise and fall in shares of Nvidia, whose chips power AI technology, has helped drive the direction of the major indexes this year. Despite US Fed officials indicating that they are in no hurry to lower rates, even after an inflation report for May suggested cooling price pressures; AI enthusiasm is winning over higher rates and propelling markets.

When it comes to investing, nothing will pay off more than educating yourself. Do the necessary research and analysis before making any investment decisions.

F&O/ SECTOR WATCH

Amidst highly volatile intraday sessions, the derivatives segment witnessed robust trading volumes. While NSE Nifty managed to close nearly unchanged and above 23,500 mark, Bank Nifty tested its record highs and wrapped the week with gains of more than three per cent. Sharp surge was seen in private banks like HDFC Bank, AXIS Bank & ICICI Bank. Bouts of profit booking was seen in FMCG, Pharma & Auto spaces. In the option segment, highest Call Open Interest concentration was seen at 24,000 strike and highest Put Open Interest concentration was seen at 23,500 strike. In the near term, the Nifty has a major support now in the zone of 23,200-23,000. For Bank Nifty, the 51,000-50,500 zone would act as a support area. Implied Volatility (IV) for Nifty’s Call options settled at 14.66 per cent, while Put options concluded at 15.60 per cent.

The India VIX, a key market volatility indicator, closed the week at 13.35 per cent. The Put-Call Ratio of Open Interest (PCR OI) stood at 1.20 for the week. Expect bullish momentum to continue if the Nifty stays above 23,500 points. Use dips to create fresh longs as far the Nifty holds above 23,200 mark broadly. A decisive close above 23,600 could trigger an uptrend towards the 24,000 zone as well. Meanwhile, ahead of Q1 earnings, stock-specific trading approach should prove effective. Stock futures looking good are Apollo Tyres, Biocon, Federal Bank, Granules, India Cements, Tech Mahindra and Infosys. Stock futures looking weak are ABB, Bharti Airtel, Gujarat Gas, Maruti, Lupin, ONGC and Zee Entertainment.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)

Bajaj Consumer Care Ltd

Bajaj Consumer Care Ltd is a fast-moving consumer goods company. The company is engaged in the manufacturing and marketing of cosmetics, toiletries and other personal care products. The company a has presence in both domestic and internationally currently present in more than 30 countries, including SAARC, the Gulf and Middle East, ASEAN and Africa. It has a presence across various segments of personal care, including hair care and skin care. While the company’s flagship brand, Almond Drops Hair Oil (ADHO), remains the primary catalyst for top-line growth, the contribution of other brands in overall revenue has also increased significantly during FY23.

In FY 2022-23, the company registered one of the fastest growths in the hair oil industry. Its range of products includes Bajaj Almond Drops, Bajaj 100 per cent Pure Coconut Oil, Bajaj Coco Onion Non-Sticky Hair Oil and many others. Its Natyv Soul products include Natyv Soul Pure Argan Oil from Morocco, Natyv Soul Argan Oil Shampoo and Natyv Soul Argan Oil Conditioner. Strategically, the company focused on modern trade and e-commerce by launching new products specifically designed for these channels. Aparte-commerce, the company’s distribution outlets are classified as two parts: general trade, which includes general retail stores and local corner shops, and organized trade, which includes large retail outlets.

The company also onboarded the well-known and popular celebrity, Kiara Advani, as brand ambassador. The company aims to leverage the strong equity of the BAJAJ brand to drive growth in skincare, hair care and other personal care categories. Buy at current levels for target price of Rs500 in medium term.