The FY24 has been a turnaround year for smallcap stocks, witnessing a significant rally with many stocks turning multibaggers. However, concerns over valuations raised by Sebi might moderate returns in FY25. While equity bulls partied hard in most of FY24, the Securities and Exchange Board India (Sebi) turned a party spoiler towards the end.
The midcap and smallcap segments of the stock market have seen significant gains in the past six months, outperforming the Nifty 50 and Sensex benchmarks. An analysis of stocks with a market capitalization of at least Rs 1,000 crore identified 10 companies that have delivered high returns but are still trading below the industry average price-to-earnings (P/E) ratio. These stocks include Suzlon Energy, Kalyan Jewellers India, Amber Enterprises India, Whirlpool of India, DLF, Brigade Enterprises, Godrej Properties, and Chalet Hotels.
Read more about BSE Smallcap index at new high; Angel Broking, Apcotex zoom 100% in a month on Business Standard. Bajaj Hindustan, Praj Ind, Zee Media, Tata Steel BSL, Dhampur Sugar, Gateway Distriparks, Jay Bharat Maruti and Gokaldas Exports have rallied between 60% and 90% in the past month
India’s ‘casino’ type midcap rally may be poised for a break
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Last Updated: Apr 22, 2021, 09:19 AM IST
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Synopsis
Fund managers at Star Health & Allied Insurance Co. and Smartsun Capital Pte said they are currently avoiding midcaps based on global economic cues and valuations.
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By Abhishek Vishnoi
The outperformance of India’s midcap stocks over their larger peers since the coronavirus pandemic engulfed global markets may take a breather, according to some investors.
Fund managers at Star Health & Allied Insurance Co. and Smartsun Capital Pte said they are currently avoiding midcaps based on global economic cues and valuations. Both said there is more safety in buying large stocks now that India has become the epicenter of virus resurgence in Asia, while inflation is set to rise in the U.S. and China as the world’s two biggest economies are rebounding.
India’s midcap rally may be poised for a break
SECTIONS
Last Updated: Apr 22, 2021, 09:19 AM IST
Share
Synopsis
Fund managers at Star Health & Allied Insurance Co. and Smartsun Capital Pte said they are currently avoiding midcaps based on global economic cues and valuations.
Getty Images
Related
By Abhishek Vishnoi
The outperformance of India’s midcap stocks over their larger peers since the coronavirus pandemic engulfed global markets may take a breather, according to some investors.
Fund managers at Star Health & Allied Insurance Co. and Smartsun Capital Pte said they are currently avoiding midcaps based on global economic cues and valuations. Both said there is more safety in buying large stocks now that India has become the epicenter of virus resurgence in Asia, while inflation is set to rise in the U.S. and China as the world’s two biggest economies are rebounding.
Olectra Greentech jumped 4.98% to Rs 226.65, extending its winning run to fifth consecutive trading session.Shares of Olectra Greentech added 27.5% in five trading sessions from its previous closing low of Rs 177.75 on 4 March 2021. The stock recorded a 52-week high of Rs 226.65 in intraday today. It has surged 453% from its 52-week low of Rs 40.95 hit on 27 March 2020.
On the BSE, 3.19 lakh shares were traded in the counter so far compared with average daily volumes of 34,000 shares in the past two weeks.
In last one month, shares of automobile maker have rallied 19% as compared to an 8% rise in S&P BSE Small Cap index.
Despite the sharp outperformance on a year-to-date (YTD) basis, analysts still believe small-and midcaps (SMIDs) have more steam left. Though there can be an intermittent correction, stock selection will be key, they say. The optimism stems from the better-than-expected rebound in economic activity after a stringent lockdown for a few months in 2020 coupled with efficacy of the COVID vaccine. On Friday, the S&P BSE Small-cap index hit a new high of 21,411, up 1 per cent on the BSE in intra-day trade as power, textiles, jewellery, industrial machinery, chemicals and packaging stocks surged. The current up move, according to analysts at Edelweiss Securities, closely resembles the rally post one global financial crisis (GFC) in 2008-09, not just in quantum and speed, but also the way small-and mid-cap (SMID) indices have outperformed large-cap peers.
Read more about Healthcare stocks edge higher on Business Standard. Healthcare stocks were trading in green, with the S&P BSE Healthcare index increasing 76.07 points or 0.36% at 21257.81 at 09:49 IST.
Power stocks were trading in the positive zone, with the S&P BSE Power index rising 8.54 points or 0.35% at 2456.75 at 09:49 IST. Among the components of the S&P BSE Power index, Adani Transmission Ltd (up 2.79%), Adani Green Energy Ltd (up 1.62%),Bharat Heavy Electricals Ltd (up 1.48%),NHPC Ltd (up 1.44%),K E C International Ltd (up 1.21%), were the top gainers. Among the other gainers were NTPC Ltd (up 0.74%), and Siemens Ltd (up 0.51%). On the other hand, Thermax Ltd (down 1.28%), ABB India Ltd (down 1.08%), and Power Grid Corporation of India Ltd (down 1.08%) moved lower.
At 09:49 IST, the S&P BSE Sensex was down 744.51 or 1.46% at 50294.8.
Telecom stocks were trading in green, with the S&P BSE Telecom index increasing 7.61 points or 0.52% at 1461.47 at 09:49 IST. Among the components of the S&P BSE Telecom index, Mahanagar Telephone Nigam Ltd (up 3.34%), Tejas Networks Ltd (up 1.45%), Bharti Airtel Ltd (up 0.73%), HFCL Ltd (up 0.34%), and Tata Communications Ltd (up 0.13%), were the top gainers. On the other hand, OnMobile Global Ltd (down 3.65%), Reliance Communications Ltd (down 1.18%), and Vodafone Idea Ltd (down 1.12%) turned lower.
At 09:49 IST, the S&P BSE Sensex was down 744.51 or 1.46% at 50294.8.
The Nifty 50 index was down 197.7 points or 1.31% at 14899.65.
The S&P BSE Small-Cap index was down 41.77 points or 0.21% at 20263.21.