August wrap: NIFTY midcap and smallcap beat NIFTY50; Defence and Metals top sectoral gainers

The NIFTY50 snapped its two-month winning streak in July, losing 1.2% for the month. The volatility remained elevated throughout the month as the index made an intra-month high of 24,774 and a low of 23,993. The index breadth went in favour of declines for the month as 31 stocks closed in the red and 19 in the green, out of the 50 stocks from the index.

The top five losers included ITC (-10.5%), Bharti Airtel (-7.9%), TMPV (-7.9%), Power Grid (-7.9%) and SBI Life Insurance (-7.6%). Meanwhile, the index heavyweights like HDFC Bank (-5.9%) and Reliance Industries (-1.3%) were also among the 19 losers for the month.

On the flipside, shares of Grasim (+8.1%), Shriram Finance (+7.8%), Bharat Electronics (+7.6%), Kotak Mahindra Bank (+7.4%) and Axis Bank (+6.0%) were among the top gainers for the month.

Contrary to the benchmark performance, the broader market indices continued their record run by outperforming the NIFTY50 by a wide margin. The NIFTY Midcap 100 index soared over 2%, and the NIFTY Smallcap 100 soared over 3% for the same period. The outperformance is primarily driven by superior earnings growth in midcap and smallcap companies for Q1FY27. Both categories delivered more than 20% profitability growth for the quarter, attracting strong inflows from institutional investors at the domestic and international levels.

Top sectoral gainers

At the sectoral level, the NIFTY India Defence and NIFTY Metals were the top two sectoral gainers, here is how they are positioned on charts and what led to the rally

NIFTY India Defence

The Defence benchmark index hit fresh record highs in August soaring over 4.1% for the month. The rally was broad based with 16 out of the 19 stocks in the index closing in green. MTAR Technologies (+20%), Paras Defence (+17%), Dynamatic Technologies (+15.9%), Solar Industries (+10.8%) are some of the top gainers in the index. Meanwhile, Astra Microvwave (-10%), Gardenreach Shipbuilers (-2.5%) and Bharat Forge(-5.9%) were the only losers in the index. The smallcap defence players like MTART Technologies, Paras Defence, Solar Industries led the rally, outperforming their big peers like Hindustan Aeronautics, BEL, Cochin Shipyard by wide margin.

NIFTY Metals

Second in the list is NIFTY Metals index, which soared over 3.7% in August, amid optimism around global metal prices. Additionally, the domestic steel prices too rallied, aiding strong boost to domestic steelmakers. Besides this, stock specific developments led to strong rally in key metal stocks like Welspun Corp, which surged over 44% in the previous month and stood as the top gainer in the index. Stocks like Steel Authority of India (+16.8%) APL Apollo Tubes (+16.5%), Hindustan Zinc (+13.2%) and Hindustan Copper (+9.5%) are some of the key gainers from the index. 11 out of the 15 index constituents closed in green, followed by 4 stocks that closed in red, namely Llyods Metals (-10%), Jindal Stainless (-4.0%), Adani Enterprises (-3.6%), and Tata Steel (-2.5%).

Top sectoral losers

NIFTY FMCG

The FMCG benchmark stood as the top sectoral loser, shedding 6.3% in August and also hitting six-month low levels. The index continued to face selling pressure as 14 out of the 15 index constituents closed in the red. Investors remain cautious as price revisions led to strong earnings growth, but the informal brands and new entrants are capturing strong market share in the areas previously held by the conventional FMCG players. Among the top losers Godrej Consumers (-16.6%), Godrej Palmolive (-12.4%), Dabur (-11.4%), Emami (-11.2), United Breweries (-10%) fell the most, except for Radico Khaitan, which surged +0.9% for the month.

On the technical charts, the index continued trade below the monthly 50-EMA levels for the six consecutive months, highlighting the weakened momentum in the index.

NIFTY Media

After soaring nearly 28% in four months, the media index snapped the rally by closing 3.7% lower in August. Majority of the stocks in the index closed in the red, barring two stocks, Nazara Technologies and PVR Inox, which surged 21.7% and 7.5% respectively. The drawdown was primarily driven by the index heavyweight stocks like Zee and Network 18, which fell 16.8% and 5.5% respectively. The sentiment around the media stocks remained subdued as corporate spending on advertising remained tepid ahead of the festive season. Additionally, the index failed to sustain above monthly 20-EMA in August, reinforcing sideways sentiment in the sector

Disclaimer: This article is written purely for informational purposes and should not be considered investment advice from Upstox. Securities mentioned are illustrative and not recommendations. Please consult a financial advisor before making any investment decisions.