News By/Courtesy: Gunjan Dayal | 29 Jun 2020 21:16pm IST

HIGHLIGHTS

  • Encouraging flows to emerge markets as a result of stimulus actions taken by central banks.
  • Advance-decline ratio until Friday was 1.64.
  • The fall in most of the 50 stocks that reported loss was in single-digits.

June is expected to become this year 's strongest month for the wider market. Close to 90 percent of the top 500 stocks had reported monthly gains until Friday. Nearly 85 percent of the components of the Handy 50 had also made good progress. This despite several headwinds such as rising COVID-19 infections, flaring up tensions between India and China and downgrading ratings by Moody's Investors Service during the beginning of the month. Experts said what worked for the markets is favorable global investor sentiment and encouraging flows to emerging markets as a result of stimulus actions taken by central banks. The Nifty Smallcap 100 broader-market index is up 16 percent in June, while Nifty Midcap 100 is up 11 percent after giving up some gains at present. All indices outperformed the month-to-date Nifty index, which has risen by 7.6 percent. The indexes had outperformed the small- and mid-caps in April, and the rally percolated to the wider markets after some consolidation in May, analysts note. “The markets saw a trickling down of bullish sentiment from large-caps to mid- and small-caps in June 2020. This month, we saw an advance-decline ratio of more than 2-to-1 on four consecutive days between June 18 and June 23. This happened for the first time since June 2014. Also, the advance-decline ratio until Friday was 1.64, the highest monthly reading since May 2009. Such an advance happening in the backdrop of the sharply slowing economy and poor visibility of the start of the recovery in terms of timing is a bit surprising,” observed Deepak Jasani, head retail research, HDFC Securities. While some cracks appeared in the broader market rally as the Nifty Midcap 100 and Nifty Smallcap 100 fell 1.6% and 1.4% respectively on Monday, compared to a decline of only 0.7% in Nifty 50. Notwithstanding this month, the broader-market return scorecard for the month has been promising. Several analysts are suspicious of this month's gains reported by both small and mid-caps. “Many speculators from the retail segment have participated this month, and many are chasing small-cap stocks. If you see the last week, a lot of institutional selling happened both from domestic investors and foreign portfolio investors. And everyone knows that June quarter will be a washout, tensions are simmering on the Indo-China border, and Covid-19 cases are rising. Despite these factors, if people are putting money, it has more to do with speculation than any fundamental reason. There is nothing in the market that justifies the interest in small and midcap stocks. This trend unlikely to continue," said G.Chokkalingam, founder, Economics. The number of stocks has doubled over this month in the top 500 universes. Several of them are Future Consumer, Shree Renuka Sugars, and Dish Television India. While nearly another three-dozen stocks reported gains of more than 40 percent. The fall in most of the 50 stocks that reported loss was in single-digits.

THIS ARTICLE DOES NOT INTEND TO HURT THE SENTIMENTS OF ANY INDIVIDUAL, COMMUNITY, SECT, OR RELIGION ETCETERA. THIS ARTICLE IS BASED PURELY ON THE AUTHOR'S PERSONAL VIEWS AND OPINIONS IN THE EXERCISE OF THE FUNDAMENTAL RIGHT GUARANTEED UNDER ARTICLE 19(1)(A) AND OTHER RELATED LAWS BEING FORCE IN INDIA, FOR THE TIME BEING.

Section Editor: Pushpit Singh | 30 Jun 2020 8:01am IST


Tags : #InvestorsAreCelebrating

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