Oil & Gas Smoothens Market Performance

Small-Cap stocks took a hit in PSU, defence and railway sectors, yet investor spirits soared with the resilience of oil and gas and automotive sectors

During the initial week of the fortnight, domestic indices experienced fluctuations, mostly marked by declines, signalling a lack of investor confidence. However, the subsequent week saw consistent gains, attributed to an unbroken rally. Consequently, the benchmarks concluded the fortnight on a positive note, with the BSE Sensex gaining by 0.47 per cent and the Nifty 50 rising by 0.90 per cent over the two-week period.  [EasyDNNnews:PaidContentStart]

The unusual trend was evident as the BSE Mid-Cap index outperformed other indices, while surprisingly the BSE Small-Cap index not only lagged behind but also found itself among the losers. The BSE Small-Cap index observed a 5 per cent decline from its fortnight peak to a trough but demonstrated a swifter rebound, mitigating previous losses to finish the fortnight with only marginal declines. As per experts’ assessments, small-cap stocks were trading well above their fair valuations, indicating an impending correction. This led to significant profit-booking within the segment, resulting in a substantial sell-off, particularly in PSU, defence, power and railway stocks.

The oil and gas industry stood out as the top performer, as evidenced by the BSE Oil and Gas index, which registered impressive gains of over 7 per cent. Oil prices have surged notably, reaching elevated levels in recent months, propelled by strong economic growth in the US, anticipation of Chinese stimulus bolstering demand, and mounting concerns originating from the Middle East. The automotive sector has shown resilience, with automobile dispatches hitting record levels and robust vehicle registrations fuelled by strong demand.

Additionally, noteworthy developments include impressive quarterly performances by automotive companies, encouraging remarks from the government regarding the future of electric vehicles, Tesla’s potential entry into the Indian market facilitated by incentives, and the forthcoming IPO of Hyundai.

Investor optimism was evident in the healthcare, real estate and information technology sectors, as reflected by significant gains reported in their respective indices. The sole sector experiencing losses during the last fortnight was the fast-moving consumer goods (FMCG), with the question of when FMCG companies – affected by inflation, decelerating sales growth, and escalating advertising expenses – will become investor favourites again. In other developments, India’s headline retail inflation rate slowed to a threemonth low of 5.10 per cent in January, as per data released by the Ministry of Statistics and Programme Implementation.

Experts have suggested that with the stable decline in core inflation and the moderation of food prices, the prospect of achieving a relatively low headline inflation rate appears favourable. Over the last two weeks, foreign institutional investors (FIIs) were net sellers, whereas domestic institutional investors (DIIs) transitioned to net buyers. FIIs registered a sizeable net outflow of `12,109 crore, while DIIs supported the market with a net inflow of `14,057 crore during the same period.

[EasyDNNnews:PaidContentEnd] [EasyDNNnews:UnPaidContentStart]

[EasyDNNnews:UnPaidContentEnd]