On Wednesday, the Nifty Smallcap 100 index extended its winning streak to the fourth day in a row, setting a new all-time high of 16,822 points, up 0.80%. Over the last three trading sessions, the index has risen by 2.46%, from 16,270 to 16,687 points.
In today's trading session, eight index members set new 52-week highs. Data Patterns (India) emerged as the top gainer, with a gain exceeding 10%. Tanla Platforms and Great Eastern Shipping Company are both trading with gains of more than 5%.
Meanwhile, key indices such as the Nifty 50 and Sensex were trading in the green in today's session, extending their bullish trend for the fourth day running. In the last three days, the Nifty 50 has risen 1.69% to 22,368 points, while the Sensex has risen by more than 1.70%.
The recent rise in Indian shares has been ascribed to positive global cues and a drop in crude oil prices, with the oil market appearing unaffected by the possibility of more sanctions on Iranian oil. Furthermore, concerns have abated as both Iran and Israel have expressed reluctance to escalate hostilities further, following limited strikes earlier this month. Small-cap stocks fell in March as regulatory scrutiny of high valuations spurred mutual fund houses to run stress tests every 15 days.
It has recovered significantly since April, with a total return of 9.79%. Retail investors have focused their portfolios on mid- and small-cap stocks in search of multibagger returns, as large-cap stocks are less likely to generate such returns due to their established market positions and elevated valuations.
In FY24, the Nifty Smallcap 100 index increased by 76.15%. Over the course of a year, the index concluded on a positive note in ten months, with November recording the largest monthly improvement of 12%. Notably, the index returned an average of 5% throughout these ten months.
Meanwhile, manufacturing activity in the United States fell to a four-month low of 49.9 in April, according to the S&P Global Flash U.S. Composite PMI, which indicates contraction when it falls below 50.
This has boosted expectations for a rate cut by the US Fed. Following the manufacturing statistics, the 10-year Treasury rate decreased 2.1 basis points, while the 2-year Treasury note yield plummeted 4.4 basis points.
Furthermore, economic statistics expected for publication this week may shed light on the economy's performance and affect Federal Reserve policymakers' decisions ahead of their meeting from April 30 to May 1.
This data includes the Federal Reserve's preferred inflation measure, the March personal consumption expenditures price index, which is slated to be released on Friday, as well as the first-quarter GDP report, which is scheduled for Thursday.
Back in India, the RBI reported in its April bulletin that inflation fell to 4.9% in March, down from an average of 5.1% the previous two months. However, there are concerns about potential inflation risks in the near term as a result of extreme weather occurrences and ongoing geopolitical tensions, which may cause volatility in crude oil prices.
Policymakers face challenges in dealing with high inflation caused by supply shocks since it is difficult to predict the nature of these shocks—whether permanent or temporary - and if they will have secondary impacts.
