Nifty Smallcap 100 Hits Record High, Surge 2.4% in 3 Sessions

The Nifty Smallcap 100 index soared to unprecedented heights, marking its fourth consecutive day of gains as it reached a new all-time peak of 16,822 points on Wednesday, showing a notable 0.80% increase. Over the past three trading sessions, the index surged from 16,270 points to 16,687 points, reflecting a remarkable gain of 2.46%.

In today's trading session, the index saw eight of its constituents hitting new 52-week highs, with Data Patterns (India) emerging as the top gainer, boasting a remarkable gain of over 10%. Following closely behind are Tanla Platforms and Great Eastern Shipping Company, both witnessing trading gains exceeding 5%.

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Meanwhile, the broader market indices, including the Nifty 50 and Sensex, continued their upward trajectory, extending their bullish trend for the fourth consecutive day. Over the last three sessions, the Nifty 50 witnessed a climb of 1.69%, reaching 22,368 points, while the Sensex surged by over 1.70%.

This recent surge in Indian equities has been attributed to favorable global cues and a decline in crude oil prices. Despite concerns surrounding potential additional sanctions on Iranian oil, the oil market remained relatively stable, alleviating worries. Moreover, tensions between Iran and Israel have shown signs of de-escalation, further bolstering market sentiment.

In March, small-cap stocks faced headwinds amidst concerns over high valuations, leading to regulatory scrutiny and subsequent stress tests conducted by mutual fund houses every 15 days. However, April has witnessed a significant recovery, with returns of 9.79% thus far. Retail investors have shifted their focus towards mid-and small-cap stocks in pursuit of multibagger returns, as large-cap stocks face challenges posed by their established market positions and elevated valuations.

In FY24, the Nifty Smallcap 100 index surged by an impressive 76.15%, with 10 out of 12 months ending on a positive note. Notably, November recorded the highest monthly increase of 12%, maintaining an average return of 5% during these positive months.

In global markets, US manufacturing activity dipped to a four-month low in April, as reported by the S&P Global Flash U.S. Composite PMI, signaling contraction when below 50. This has fueled optimism for a potential rate cut by the US Federal Reserve, with yields on treasury notes witnessing a decline.

Looking ahead, economic data releases throughout the week, including the Fed's preferred inflation measure and first-quarter GDP readings, are poised to offer insights into the economy's performance, potentially influencing Federal Reserve policymakers' decisions during their upcoming meeting from April 30 to May 1.

In India, the RBI's April bulletin highlighted a slight easing of inflation to 4.9% in March, down from the previous two months' average of 5.1%. However, concerns persist regarding potential inflation risks stemming from extreme weather events and geopolitical tensions, posing volatility risks in crude oil prices. Policymakers face challenges in addressing high inflation resulting from supply shocks, given the uncertainty surrounding the nature and duration of these shocks and their potential secondary effects.

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