Domestic indices closed in the red on Friday, falling for the fourth consecutive trading day as strong US economic data stoked concerns that the US Federal Reserve would remain hawkish into 2023.
In addition to that, a rise in Covid cases in China also dampened risk appetite. Domestically, India will start randomly testing 2% of foreign passengers arriving at its airports for coronavirus as the country steps up surveillance for new variants, according to media reports.
Last week, Indian equity markets suffered their greatest weekly drop in six months and are on track to record their worst monthly loss in 2022. During the week, the BSE Sensex lost 1,492.50 points, or 2.43, to close at 59,845 while the Nifty50 lost 462 points, or 2.53, to finish the week at 17,806. The BSE small-cap index fell 7.67% during the same period, while the BSE midcap index closed 5.10% lower.
Following two consecutive months of substantial gains in October and November, a negative trend started this month with the Sensex losing 5.16% and the Nifty dropping 5.07% so far.
The Nifty has corrected by almost 5.72% from its record high of 18,887 marked in December 01. Similarly, the Sensex has plunged 5.87% from its all-time high of 63,583.
FPIs, on the other hand, remained strong despite a strong sell-off in the Indian markets. FPIs have pumped in around ₹1,002 crore in the last week. FPI investments in Indian stocks rose to ₹11,557 crore so far in December, Mint reported, quoting NSDL data.
However, year-to-date, FPIs are net sellers in equities with an outflow of ₹1,21,001 crore. So far in 2022, in the equities, FPIs made the biggest buying in August to the tune of ₹51,204 crore, followed by November to ₹36,239 crore so far in 2022, according to the report.
Crude oil prices rallied sharply last week, with WTI crude futures gaining 6.85% to $79.56 a barrel. Brent crude futures surged 6.24% to $83.97 a barrel. Crude oil prices surged as Russia's Baltic oil exports were expected to fall 20% month on month in December.
Russia may reduce output by 500,000 to 700,000 barrels a day in early 2023 after the European Union and G7 nations-imposed sanctions and a price cap on Russian crude, Trading Economics reported.
In addition, US crude inventories fell by 5.89 million barrels last week, much more than market forecasts for a 1.66-million-barrel drop.
Despite the ongoing declines in the Indian equity market, six BSE small-cap stocks have witnessed gains of between 10 and 38% during the past week.
Five out of six stocks gained last week are related to the pharma industry. The rally in the pharma stocks came after a sharp rise in Covid cases in China. As the prevalence of the Omicron subvariant BF.7 increased recently in China and other nations, the Indian government issued an alert to the states and union territories (UTs).
Morepen Laboratories, an Indian pharmaceutical firm, gained 38% and was the biggest gainer in the BSE small-cap index last week. The stock began its upward journey at ₹30.90 apiece and reached ₹42.65, generating a return of nearly 38%.
Syncom Formulation was another small-cap stock that rallied from ₹7.85 apiece to the current level of ₹9.74, producing a return of 24%.
IOL Chemicals and Pharmaceuticals was also another big mover last week. The stock climbed from ₹336.85 to ₹409.70, representing a return of 21.62%. On the technical charts, the stock is trading 11% above its 200-day moving average.
Similarly, shares of Nectar Lifesciences also jumped 18%, rallying from ₹23.30 apiece to ₹27.50. The majority of the stock's gains occurred during Friday's intraday trade, which saw a spike of 14.82% with 10.1 million shares traded on both the NSE and BSE.
JBM Auto, an auto ancillary stock, rose 12%, surging from ₹412.15 apiece to the current level of ₹461.85. However, the stock is still trading 32% lower than is 52-week high of ₹674.8.
Nureca, a manufacturer of medical devices and wellness products, increased 10.3% to ₹543.30 per share last week. On December 22, the stock surged 17% amid growing concerns over the surge in Covid-19 cases in China.
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