India Inc's December quarter earnings showed weakening profit momentum at an overall level but we filtered out a list of 16 smallcap companies which reported over 100% growth in sales and profit on a YoY basis. Waaree Renewable Technologies, Advait Infratech, Cressanda Railway Solutions, and Swelect Energy Systems were among the top performers. 14 out of 16 of these stocks have already given multibagger returns in last one year.
Automobiles and financials continued to propel the overall earnings growth, while they were also joined by global cyclicals such as oil and gas and metals. The only heavyweight sector to disappoint was information technology, with the overall earnings seeing a decline for the first time in 26 quarters.
This isn't a hypothetical example to understand the link between stock price reaction and concentrated ownership but a reality in the world of PSU stocks on Dalal Street.
An ETMarkets poll of 23 analysts from Dalal Street shows that most analysts see Nifty ending at 23,000. In the base scenario, Axis Securities sees Nifty at 23,000 in December 2024 by predicting that earnings will grow at 14% CAGR over FY23-26
NTPC is currently trading at 13.8x FY25 earnings per share estimate, while the firm believes it should not be more than 9x for its existing coal-based portfolio and how it has historically
While the headline index Nifty fell around 0.5% on Monday morning, the pain was deeper in the broader market with both mid and smallcap indices trading around 1% lower. Out of nearly 3,600 stocks that traded on BSE today, the vast majority of around 2,500 were trading in the red.
The selloff in small and midcap stocks is in contrast to lacklustre trade in Nifty and Nifty Bank. Nifty PSU Bank lost over 1% with Punjab and Sind Bank, UCO Bank and Maharashtra Bank leading the downside with a 5% fall.
Market sentiment is quite exuberant based on steep increase in the prices of many midcap and smallcap stocks, large inflows into midcap and smallcap mutual funds, and huge number of new retail participants in the midcap and smallcap funds, Kotak said.
In the rally which looks one-way on the larger time frame, the market cap crossed the Rs 50 lakh crore mark in 2007, Rs 100 lakh crore milestone in 2014, and the Rs 200 lakh crore-mark in February 2021. The surge in market capitalisation is a result of not only an increase in stock prices but also takes into account new listings on the stock exchange.