Rough week for broader markets; Small cap bleeds the most in 20 weeks

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Equity indices staged a strong recovery on Friday, breaking a five-day losing streak. But rising global bond yields and resurgence of Covid-19 cases have left the broader markets in tenterhooks. The Nifty-50 was up 186.1 points or 1.28 per cent to close at 14,744, however, it ended the week in negative territory, down by 1.9 per cent. The broader market indices, Nifty Midcap 50 and Small cap 50 saw a bigger fall 3 per cent and 3.3 per cent, respectively, during the week. With this, the midcap index fell the most in seven weeks, while its smaller counterpart witnessed the sharpest contraction in 20 weeks.

“This week both Nifty-50 and BSE Sensex corrected by 1.7 per cent amid concerns on rising global bond yields and a spike in Covid-19 cases in India. Mid and Small caps saw a bigger cut as Nifty-50 failed to cross the 15,000 mark. Retail investors may be reluctant to build exposure in stocks as we near the fiscal year end. Profit booking was mostly seen in sectors that had gained the most recently,” said Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities. 

This week, the US 10-year bond yield spiked to 1.75 per cent, which has led to volatility in global markets. Internationally, the Fed’s willingness to keep lending support to the economy indicates the central bank could allow inflation to overshoot along with economic recovery. “In India, the Covid-19 cases have been on the rise but we have not seen similar increase in the number of deaths. This time even though the number of cases are going up, the impact on business and manufacturing activity is not much. Nonetheless the street would be concerned about the resurfacing of cases and to that extent we could see profit booking at every rise in the very near future,” he added.

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In the week ahead, the market is expected to gain traction based on global cues due to the lack of any major upcoming economic events, said Vinod Nair, Head of Research at Geojit Financial Services.