Nifty Smallcap 100 Hits Record High, Surges 2.4% in 3 Sessions – Find Out Why

Post by: Raman Preet

The Nifty Smallcap 100 index is riding high, hitting an all-time peak amidst a broader rally in Indian equities. Notably, both the Nifty 50 and Sensex are also on the ascent. This surge in Indian markets has been fueled by a combination of global cues and a downturn in oil prices, offering a boost to investor sentiment.

Small-cap stocks, in particular, have staged a remarkable recovery in April after grappling with regulatory scrutiny in March over concerns regarding lofty valuations. Mutual fund houses responded by implementing stress tests at shorter intervals. However, in the current month, small-cap stocks have bounced back significantly, with the Nifty Smallcap 100 index rallying by an impressive 9.79% thus far.

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In today's trading session, the Nifty Smallcap 100 continued its winning streak for the fourth consecutive day, reaching an unprecedented high of 16,822 points, marking a gain of 0.80%. Over the past three sessions alone, the index has surged from 16,270 points to 16,687 points, reflecting a remarkable gain of 2.46%.

In the midst of this surge, eight constituents of the index have soared to new 52-week highs, underscoring the breadth of the rally. Noteworthy gainers include Data Patterns (India), which saw a staggering increase of over 10%, followed closely by Tanla Platforms and Great Eastern Shipping Company, both recording gains exceeding 5%.

Simultaneously, benchmark indices such as the Nifty 50 and Sensex have maintained their upward trajectory, extending gains for the fourth straight day. Over the last three sessions, the Nifty 50 has climbed by 1.69% to reach 22,368 points, while the Sensex has rallied by over 1.70%.

The upbeat sentiment in Indian markets can be attributed to favorable global cues, coupled with a decline in crude oil prices. Despite concerns surrounding potential disruptions in the oil market due to additional sanctions on Iranian oil, both Iran and Israel have indicated a reluctance to escalate tensions further, alleviating market apprehensions.

However, amidst this optimism, there are lingering concerns regarding inflation risks in the near term, exacerbated by extreme weather events and geopolitical tensions, which could induce volatility in crude oil prices.

On the international front, U.S. manufacturing activity dipped to a four-month low in April, signaling contraction and bolstering expectations for a rate cut by the US Federal Reserve. This development has impacted Treasury yields, with both the 10-year and 2-year Treasury yields experiencing declines.

Looking ahead, economic data releases scheduled for the week, including the first-quarter gross domestic product reading and the Fed's preferred inflation measure, the personal consumption expenditures price index for March, are expected to offer further insights into the economic landscape. These data points could shape Federal Reserve policymakers' decisions ahead of their meeting from April 30 to May 1.

In summary, Indian equities are riding high on a wave of optimism, with small-cap stocks leading the charge in April amidst a favorable global backdrop and declining oil prices. However, caution remains warranted as markets monitor evolving geopolitical dynamics and their potential impact on inflationary pressures and crude oil volatility.

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