Indian Market Ends Week with Mixed Bag, Despite Record Highs for Small-Caps

The Indian stock market had a mixed performance in the week ending December 22nd, with the BSE Sensex and Nifty50 closing lower despite hitting fresh highs earlier in the week.
The decline was primarily driven by concerns about rising COVID-19 cases and selling from foreign investors, which weighed on investor sentiment.

The Sensex lost 0.52% to close at 71,106.96, and the Nifty50 dropped 0.49% to end the week at 21,349.40. While the mid-cap and small-cap indices reached record highs, they ended flat or negative. The BSE Small-cap index hit a new high but ended flat, and some small-cap stocks like PC Jweller, Salasar Techno Engineering, and Gallantt Ispat saw significant gains.

Despite the mixed performance, the Indian market received support from strong domestic buying and the expectation of a potential rate cut in 2024. However, selling from foreign investors, concerns about rising COVID-19 cases, and premium valuations contributed to the decline.

In terms of sectoral performance, the Nifty PSU Bank, Media, Auto, and Metal indices fell, while FMCG and Pharma gained. The Bank Nifty closed 1.35% lower at 47,491.85.

India VIX, a measure of market volatility, remained above 13.5, indicating potential for increased volatility in the coming days. The Indian market is expected to remain range-bound in the coming weeks with limited data points and the festive season approaching.

Conclusion

Despite facing a downtrend in larger indices, the small-cap sector is showing remarkable resilience and is bucking market trends. This is indicative of a positive outlook among investors about smaller companies with the potential for growth.

As we approach the upcoming holiday season and year-end, there may be a slight slowdown in the market, but volatility is expected to increase. This report aims to provide a detailed overview of the current performance of the Indian market, with a special focus on the thriving small-cap sector and the sentiment of investors.