The Market Mood Index indicates Nifty is in an extreme fear zone, historically a good buying opportunity. Key support levels for Nifty are at 24102, 23703, 23366 and 22821, while resistances are at 24408, 24547, 24714, 24996, and 25338. A move above 25338 could signal a bullish trend towards 25656.
Small and mid-cap stocks have crashed due to 1) 97% of results announced until 25th October being flat or poor and experts indicating continued underperformance until mid-November. 2) Substantial FII selling worth Rs. 1,00,149 cr. on October 24 is expected to persist until the end of the month, causing panic among investors. The new SEBI regulation has removed around 1,010 stocks from being used as collateral for loans, limiting leverage for traders and triggering a massive unwinding of positions. Most small and mid-cap stocks have plummeted between 20% and 60% in a matter of days, raising questions about what fundamental changes occurred. With a peak MTF book of Rs. 73,500 cr. and reduced stocks acceptable as collateral from 1,730 to around 700, many investors may struggle to meet margin calls, exacerbating the situation. As high-net-worth individuals often leverage their positions, their inability to use these stocks as collateral has led to widespread losses, significantly impacting the supply and demand dynamics in the small and mid-cap segments.
A circular issued in July 2024 for delisting collateral gradually reduced trading limits from 75-80% to 40%. By November, the loan value on many stocks may fall to zero, causing panic among investors. Stocks previously valued at Rs. 100 with loans of Rs. 75-80 will drop to Rs. 40, leading to uncertainty for around 1,000 shares used as collateral and resulting in unwinding positions.
The regulatory circular prohibiting margin funding in over 1100 stocks include market favourites like Adani Power, Tata Investments, HUDCO, etc. Other stocks where little or no leverage will include Yes Bank, Suzlon, Bharat Dynamics, Paytm, Pilani Investments and Industries (Birla Group), Autumn Investments, Atul Auto, Allcargo, IRB Infrastructure, NBCC, Go Digit, Inox Wind, Jupiter Vagons, KIOCL, Jyoti CNC Automation, JBM Auto, Hetson Agro Product, Tejas Networks together with many other well-known small and mid-cap companies that generated high trading interest created by operators raising funds against pledged shares and buy more to push up the scrip further will cease by 31st October 2024. Operators have been forced to return borrowed funds by liquidating their stocks, which has led to the sharp decline in the market. These will, however, stock after 1st November with this new regulation and panic selling will be contained.
In 6th January MTTs, Cignity given at Rs.1041 touched Rs.1552 during this week in a highly negative market.
In 13th January MTTs, Anantraj given Efactor given at Rs.162 touched Rs.300 - a gain of 85% in highly negative market sentiments.
In 27th January MTTs, Essen Specialty Films given at Rs.219 touched Rs.687 - a superb gain of 214%.
In 10th February MTTs, Univastu given at Rs.134 touched Rs.276 - a gain of 106%.
In 17th February MTTs, Lehar Footwears given at Rs.132 touched Rs.275 during the week - a gain of 108%.
In 16th March MTTs, Ritco Logistic given at Rs.223 touched Rs.409 - a gain of 83%.
In 6th April Kaka Industries given at Rs.179 touched Rs.328 - a gain of 83% during the week
In 18th May MTTs, Va Tech Wabag given at Rs.981 touched Rs.1906 - a gain of 94% during the week.
In 15th June MTTs, EPack Durable given at Rs.212 touched Rs.471 - a gain of 122% during the week.
In 17th August MTTs, Pennar Ind., given at Rs.168 touched Rs.215 - a gain of 28%, Univastu given at Rs.228 touched Rs.276 during the week.
In 12th October MTTs, BF Utilities at Rs.1064 was suggested to exit. It declined to Rs.871 and still looks overpriced.
