Technical Analysis of Indian Equities by Nooresh

Smallcaps showing Strength for the first time since 2018

What is interesting in the current #mayhem is #SmallcapIndices have fallen in-line with the #Nifty. In earlier drops, we would generally see 1.5-2.5 x the Nifty moves in #SmallcapIndices. Look back into #smallcaps you liked and missed in December.

Ever since 2018 the Ratio Chart of Smallcap/Nifty has continued to make new lows. The Smallcap Index is back to where it started from in December 2019 and not far from the lows of 2019. Just 10% higher.

This suggests whenever the mayhem is over Smallcaps could well outperform the Index materially in any bounce or trend change.

Nifty Smallcap 100


1st chart is Ratio

2nd is Nifty

3rd is Nifty Small 100

The Ratio Chart Zoomed up

Smallcaps Ratio

If you believe the World is not ending this may again be an opportunity for looking at Smallcaps and even Midcaps.

Yet again this is a pretty contrarian view.

Like mentioned in our previous post – VIX at 45 ( just did 48-49) today for S&P 500 as created major bottoms. ( Apart from 2008) so we would go with the view this is not 2008 and buying now would imply another 20% hit and not a 50% cut.

Disclaimer – Do your own research and risk management

Article by Nooresh Merani

Nooresh has written 2753 articles.

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