Weakness in small and mid-caps likely to persist

The uncertainties associated with the Israel-Hamas conflict will continue to weigh on markets in the near-term, says V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Positive news like decline in the US bond yields and weakening crude can help the market to revive but it may not sustain given the uncertainty surrounding the West Asian conflict. Investors may opt for a cautious approach to the market till some clarity emerges on the geopolitical situation, he said.

An important feature of the near-term market is the weakness of the broader market. On Monday when the Nifty corrected by 1.3 per cent, Nifty Small-cap crashed by 3.9 per cent. Since the valuations in mid and small-cap space are higher than that of large-caps, this weakness is likely to persist, he added.

Safety is now in large-caps particularly in banking majors which are fairly valued, he said.

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said Nifty tanked heavily with profit booking witnessed once it breached below the crucial and important support zone of 19,500 levels with bears taking control of the situation and overall bias has turned very cautious.

The 19,200 zone shall be a crucial support zone failing which there can be further intensified selling pressure with next major support maintained near 18,800 levels. The support for the day is seen at 19,100 levels while the resistance is seen at 19,450 levels, Parekh said.

BSE Sensex is down 17 points at 64,544 points on Wednesday. Infosys is down 2 per cent.

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