Time to buy mid-, small-cap stocks at 52-week lows? Here's what charts say

13 stocks from the Nifty Midcap index and 18 from the Nifty Smallcap index hit fresh 52-weeks lows during the current week

The benchmark indices BSE Sensex and Nifty 50 opened on a positive note on Wednesday, mirroring the cues from their Asian peers. But the underlying sentiment remains nervous owing to the ongoing geopolitical tensions between Russia-Ukraine. Russian President Vladimir Putin's order to deploy troop on the recognised territories in the eastern Ukraine region, has seen reciporcal response from the western powers with fresh sanctions.

This has fanned fears of disruption in the oil production/ supply which pushed the Brent Crude to its highest level since 2014, almost hitting the $100-mark on Tuesday.

As of 11:30 AM, the BSE Sensex was at 57,605, up 300 points or 0.54 per cent, while the Nifty 50 stood at 17,177, up 85 points or 0.50 per cent.

In the present scenario the weekly charts indicate a major sell-off for the midcap and smallcap stocks. So far this week, 13 of the 100 Nifty Midcap stocks registered fresh 52-week lows, while 18 from the Nifty Smallcap index did the same.

Among midcaps, Amara Raja Batteries, City Union Bank, Manappuram Finance, Exide Industries, The Ramco Cements and MRF were some of the prominent names to hit a new 52-week low.

Whereas in the smallcap space - Burger King India, Rallis India, Sterlite Technologies, Ujjivan Small Finance Bank, Ceat, Indigo Paints and AstraZenca Pharma India. 

Here's the technical outlook for both the indices:-

Nifty Midcaps 100

Outlook: stay sideline

The Midcap index violated the 200-day moving average (DMA) at 28,920 level in the first half of the month. The weak sentiment recovered thereafter, but could not hang on the positive momentum. The current price level is under 200-DMA and until it trades below the same, the outlook remains negative. That’s said, the 50-weekly moving average (WMA) placed at 28,272 appears to provide some relief. At the moment, it is advisable to stay on the sidelines and let index display a clear direction, based on the charts.  CLICK HERE FOR THE CHART

 

Nifty Smallcaps 100

Likely target: 9,000 (if fails to rebound)

Downside potential: 10%

 

The index is trading well below the 200-DMA, an indicator that signifies strength and momentum. It does show a losing momentum under 200-DMA, and even 50-WMA is breached at 10,194, sensing aggressive weakness.  Going forward, if the index fails to rebound above 10,530, its 200-DMA, then the indx may slide to 9,000 levels.  CLICK HERE FOR THE CHART