Investors show preference for small, mid-caps

The much expected churn from large-cap to mid- and small-cap stocks seems to have begun. While the key benchmark indices "� the Sensex and the Nifty that cover large-cap stocks fell about 1 per cent on Thursday, the BSE Mid-cap and BSE Small-cap indices rose on significantly strong buying into such stocks.

"We feel investors could get higher returns from mid- and small-cap stocks this year. Large-cap stocks are almost fully priced at current levels," said Nilesh Shah, executive director of Edelweiss Securities.

He, however, said investors needed to be selective while picking stocks. "Stock selection is the key," he said.

The Sensex opened at 14,029.04, reached a high of 14,060.35 points, before settling down at the 13,871.71 level, losing 143.21 points from its previous close of 14,014.92 points.

While the Mid-cap index gained 9.61 points or 0.16 per cent to 5,941.99, the Small-cap index rose 69.76 points or 0.98 per cent to 7,150.13 points.

"Investors are finding small- and mid-cap stocks attractively valued. Besides, as 26 new stocks entered the F&O segment, investors now have better options to invest," a top fund manager with SBI Mutual Fund said.

Prominent gainers in the mid-cap and small-cap category were iGate Global (up 7.45 per cent to Rs 404.70), IBP (up 5.88 to Rs 479.80), Crompton Greaves (up 5.73 per cent to Rs 228.95), Balaji Tele (up 5.09 per cent to Rs 138.25) and Exide Industries (up 4.81 per cent to Rs 138.25).

Profit-booking was seen mainly in technology stocks, as Satyam, Wipro, Infosys and TCS ended in the red. FMCG major ITC was the top loser shedding 3.68 per cent to Rs 168.90.

The company being primarily engaged in the tobacco business, its products could face higher taxation going forward. While Hero Honda lost 2.98 per cent to Rs 755, Hindalco was down 2.64 per cent to Rs 174.90 and Satyam slipped 2.56 per cent to Rs 501.95.

"We expect the Nifty to be at support level of 3,900-3,930. In the present situation, it is difficult to predict the future movement, as traders are seen taking positions," Sandeep Wagle, chief technical analyst, Angels Broking, said.

Of 2,654 stocks, 1,538 (57 per cent) advanced, while 1,062 (40 per cent) trailed with prices of the 54 remaining unchanged.