Exide, UTI AMC: 5 SmallCaps that hold promise in this market correction

Godfrey Phillips has been one of the key outperformers among SmallCaps thus far in 2024; presently the stock is seen testing support at its trend line, shows daily chart.

SmallCap stocks have witnessed a steep fall in recent trading sessions post reports of Sebi likely to tighten regulations with regards to investments in this space. That apart, talks of a likely bubble in SME pricing, listing too dented the sentiment.

Technically, the Nifty SmallCap indices have entered into a correction phase, as they have declined over 10 per cent from their recent peaks. The Nifty SmallCap 50 index has shed 12.8 per cent from its peak of 7,732 in February 2024. Similarly, the Nifty SmallCap 100 and SmallCap 250 have declined 12.6 per cent and 11.2 per cent, respectively, from their summits.

In comparison, the NSE benchmark Nifty 50 was quoting 1.5 per cent lower from its all-time high of 22,526. Whereas, the Nifty MidCap 50 and MidCap 150 had slipped over 5 per cent each from the highs, while MidCap 100 was down 2.5 per cent.

Meanwhile, during this period, as many as 90 out of the Nifty SmallCap 250 stocks have declined over 10 per cent in the last one month. IIFL Finance, JM Financial, MMTC, NBCC (India), ITI, RHI Magnesita, PCBL, Angel One, GSFC, Astrazeneca Pharma, SJVN, TCI Express and RCF were the major losers, down over 22 per cent each.

On the other hand, there have been select outperformers too. Tata Investment Corporation, up 58 per cent as of March 12 was the top mover. Godfrey Phillips, Data Patterns (India), Kalpataru Projects, Natco Pharma, KEC International, Blue Star and Intellect Design have all gained over 10 per cent each.

Against this background here are five SmallCap stocks that can potentially outperform amid the present corrective phase.

Nifty SmallCap 250

Current Level: 13,655

Downside Risk: 7.5%

Resistance: 14,750; 14,900

The Nifty SmallCap 250 is seen quoting below the 100-DMA (Daily Moving Average) which stands at 13,915 levels. The index seems on course to test its 200-DMA support at 12,600-odd levels, thus suggesting a downside risk of 7.5 per cent from present levels. 

The near-term outlook is clearly negative for the SmallCap index as it quotes below its short-term moving averages. In case of a pullback, the index is expected to counter resistance around 14,750 and 14,900 levels. 

Balrampur Chini

Current Price: Rs 352

Upside Potential: 27.8%

Support: Rs 327; Rs 320

Resistance: Rs 361, Rs 375

Balrampur Chini has declined over 25 per cent in the last four straight months. On the long-term scale, the stock seems to be range-bound between Rs 320 - Rs 350. At present levels, the stock is 9 per cent away from the lower end of its anticipated trading band.

In the interim, there exists a strong support in the form 200-WMA (Weekly Moving Average) at Rs 327. 

Having said that, the short-term bias for the stock is likely to remain negative as long as it trades below Rs 361. The stock needs to cross this hurdle and then sustain above its 20-DMA at Rs 375, in order to resume a pullback rally towards Rs 450 levels. CLICK HERE FOR THE CHART

Exide Industries

Current Price: Rs 306

Upside Potential: 11%

Support: Rs 305

Resistance: Rs 312; Rs 326

The stock price of Exide Industries is presently seen testing support around its 100-DMA at Rs 305. Key momentum oscillators are in fairly oversold zone, hence some pullback can be expected at the counter in case the support holds. CLICK HERE FOR THE CHART

As such, the stock can potentially bounce back to Rs 340 levels, with interim resistance seen around Rs 312 and Rs 326. On the flip side, failure to sustain above the 100-DMA can trigger a fall towards the 200-DMA, which stands at Rs 280.

Godfrey Phillips

Current Price: Rs 3,035

Upside Potential: 13.7%

Support: Rs 2,980; Rs 2,920

Godfrey Phillips has been one of the top outperformers. The stock has rallied by 34 per cent in the last one month, and gained as much as 75 per cent at the highs of the year so far in just three months.

The stock has witnessed losses in back-to-back sessions, and is now seen quoting close to its 20-DMA at Rs 2,920. In the interim, the super trend line shows support for the stock at Rs 2,980. CLICK HERE FOR THE CHART

As long as these short-term levels are held, the stock may look to bounce back to Rs 3,450 levels in the near-term.

Lemon Tree Hotels

Current Price: Rs 132

Upside Potential: 9.8%

Support: Rs 130; Rs 128; Rs 126

Resistance: Rs 139

Lemon Tree has witnessed a gradual up move post its breakout in mid-April 2023. The stock has rallied as much as 82 per cent since then. Presently, the stock is seen testing support around its trend line at Rs 130-odd levels, below which stands at the 20-WMA at Rs 128 and the 100-DMA at Rs 126; thus implying presence of multiple key supports in the near zone.

As long as the stock manages to hold this support zone, the stock may look to bounce back and test Rs 145 on the upside. Interim resistance for the stock can be expected around Rs 139 levels, wherein the short-term moving averages coincide. CLICK HERE FOR THE CHART

UTI AMC

Current Price: Rs 825

Upside Potential: 9%

Support: Rs 805

Resistance: Rs 845; Rs 880

At present levels, UTI AMC is seen testing support around its 200-DMA, which stands at Rs 805. Even as the stock trades fairly below its shorter-term moving averages, the price-to-moving averages action remains favourable with the shorter-term moving averages seen holding above the long-term moving averages. CLICK HERE FOR THE CHART

Given the fact that the key momentum oscillators are in oversold zone on the daily scale, the stock may attempt to seek support around its 200-DMA for now. As such, the stock may then attempt to bounce back to Rs 900-odd levels, with interim resistance expected around Rs 845 and Rs 880.