Riding the momentum! Sensex ends flat but these 15 stocks rose 10-60% in a week

It has been a roller coaster ride for Indian markets thanks to trade wars woes, uncertainty OPEC meet and selling by foreign institutional investors which have pulled out over Rs 5,000 crore from Indian markets in the month of June.

The S&P BSE Sensex which hit a low of 35,249 on June 19 managed to recoup losses and closed flat with gains of 0.19 percent for the week ended June 22. The Nifty50 ended flat but with a positive bias at 10,821.85 in the same period.

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While the action was missing in benchmark indices selective stocks in the smallcap space were buzzing. As many as 15 stocks in the S&P BSE Smallcap index rose 10-63 percent in just one week.

Stocks which registered double-digit return include names like Tree House Education (up 63 percent), followed by Zen Technologies (up 27 percent), Vakrangee (27.4 percent), Alok Industries (up 26 percent), Jaiprakash Associates (up 19 percent), and Liberty Shoes (up 16 percent).

Tree House Education was in focus after the company's associate company JT infrastructure Pvt. Ltd. sold part of its fixed assets including a land and building situated at Kalyan district in Thane near Mumbai, the company said a filing.

In the S&P BSE 500 index, only 4 stocks registered double-digit returns which include stocks like Vakrangee (up 27 percent), followed by Jaiprakash Associates (up 19 percent), Abbott India (up 13.69 percent), and Adani Transmission (up 10 percent).

Most of the stocks which registered gains saw value buying at lower levels, but does that make them great investment bets also? Well, maybe not.

There might be momentum in these stocks for now but data also suggest that most of the stocks in the above list witnessed selling pressure in the last 2-3 months. Analysts advise investors to stick to quality or in other words stay with large caps.

“We had categorically stated in our earlier outlook as well, that the midcap-smallcap are a strict no-no, given the intrinsic weakness in individual stocks and in indices as a whole,” Pushkaraj Sham Kanitkar, AVP - Technical Research at GEPL Capital told Moneycontrol.

“We still stand by our hypothesis that the broader indices may further correct by around 5-7 percent. Hence, one could be looking at opportunities for exiting these scrips on any fruitful rise,” he said.

The Laggards:

As many as 387 stocks in the S&P BSE 500 index recorded negative returns for the week ended June 22. Top 10 stocks which recorded double-digit cuts include stocks like Avanti Feeds (down 16 percent), HCC (down 15 percent), Take Solutions (down 14 percent), Time Technoplast (down 12 percent), SRF (down 12 percent), PNC Infratech (down 11 percent), PC Jeweller (down 10 percent), and Jindal Saw (down 10 percent).

It has been a roller coaster ride for Indian markets thanks to trade wars woes, uncertainty OPEC meet and selling by foreign institutional investors which have pulled out over Rs 5,000 crore from Indian markets in the month of June.

“The market is clearly in the whipsaw mood typically known as correction phase. It is said that all the monies made during bull market get marooned in the correction phase. The bad news of tariff wars at first the market gaps down and recovers and on the good news of oil moves lower the stock indices gaps up but then again comes down, this is nothing but the directionless market,” Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote told Moneycontrol.

“This kind of phase often comes but unfortunately no one can predict the end of such correction. On one hand, FPIs are selling, they have sold stocks worth Rs 5,777 crore during the month of June at the same time Mutual Funds have bought shares worth Rs 3489 crore. Investors should stay on the sideline till market makes a panic bottom,” he said.

Technical Outlook:

The Nifty opened on a negative note on Friday weighed down by weak global cues. However, in absence of follow up selling the lead to sharp rise in the index in the second half of the session which helped Nifty to close above 10,800.

In the process, it has reached the resistance zone of 10,830 – 10,850 which is the gap formed on June 14 2018 and falling trendline formed by connecting the previous two highs of 11,171.55 and 10,929.20.

“We expect the trendline to provide stiff resistance to the further upside. In case, the Index holds above the resistance area of 10,830 – 10,850, the rise can continue till 10,929, which is the next major hurdle,” Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas told Moneycontrol.

“On the way down 10,738 – 10,685 shall act as crucial support for the Nifty. Overall, the short-term chart structure of the index is bearish and we continue to maintain our bearish outlook on the index for the short term with a reversal placed at 10,930,” he said.

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