 "Mid, small-cap indices at 10-month highs")
Stocks of mid- and small-sized companies continued at their upward march on the first trading day of calendar year 2014 with both the S&P BSE mid-cap and small-cap indices touching their respective ten-month high.
The S&P BSE Small-cap Index was up 1.5 per cent at 6,649 points, while the Mid-cap Index gained 0.50 per cent at 6,737 points to close at their highest level since February 22, 2013, though the benchmark indices – the S&P BSE Sensex and the CNX Nifty are struggling to maintain an uptrend.
Both the S&P BSE mid-cap and small-cap indices have outperformed the market by surging 29 per cent each from their August lows, as compared to 17 per cent rise in benchmark index. The S&P BSE Sensex had touched a record high of 21,326 on December 9.
However, both these indices are still far away from their all-time highs touched in 2008. The S&P BSE Small-cap Index touched a high of 14,239 and Mid-cap Index of 10,246 during January 2008.
Packing a punch
Among individual stocks, D B Realty, Ashoka Buildcon, Jindal Saw, Punj Lloyd and Elder Pharmaceuticals from Small-cap Index have rallied over 10 per cent each, while Godrej Properties, Suzlon Energy, Gujarat Flurochemicals, Uco Bank and Indiabulls Real Estate from Mid-cap Index surged over 6 per cent on Wednesday.
Meanwhile, out of 643 stocks from the S&P BSE mid-cap and small-cap indices, almost half or 318 stocks have outperformed the market, gaining over 29 per cent since August 28. Of these, nearly 148 have rallied by over 50 per cent.
The S&P BSE Small-cap Index was up 1.5 per cent at 6,649 points, while the Mid-cap Index gained 0.50 per cent at 6,737 points to close at their highest level since February 22, 2013, though the benchmark indices – the S&P BSE Sensex and the CNX Nifty are struggling to maintain an uptrend.
Both the S&P BSE mid-cap and small-cap indices have outperformed the market by surging 29 per cent each from their August lows, as compared to 17 per cent rise in benchmark index. The S&P BSE Sensex had touched a record high of 21,326 on December 9.
However, both these indices are still far away from their all-time highs touched in 2008. The S&P BSE Small-cap Index touched a high of 14,239 and Mid-cap Index of 10,246 during January 2008.
Packing a punch
Among individual stocks, D B Realty, Ashoka Buildcon, Jindal Saw, Punj Lloyd and Elder Pharmaceuticals from Small-cap Index have rallied over 10 per cent each, while Godrej Properties, Suzlon Energy, Gujarat Flurochemicals, Uco Bank and Indiabulls Real Estate from Mid-cap Index surged over 6 per cent on Wednesday.
Meanwhile, out of 643 stocks from the S&P BSE mid-cap and small-cap indices, almost half or 318 stocks have outperformed the market, gaining over 29 per cent since August 28. Of these, nearly 148 have rallied by over 50 per cent.
The stock market regulator Securities and Exchange Board of India's (Sebi) announcement on 19 December 2013 that it has decided to rationalise the rules on trading of thinly-traded stocks, boosted interest among investors in these counters, analysts say. "We strongly believe the time has come where mid-cap and small-cap stocks will ride the boom now. There will huge action in 2014 to bridge the valuation gaps of small caps mid caps with large caps. Large caps are at rich valuations leaving little scope of fresh investments whereas midcaps will give enough opportunity to multiply your money," said Kishor Ostwal, CMD, CNI Research.
"Reliance Industrial Infrastructure, Bombay Dyeing, Goodricke Group, VA Tech Wabag, Fedders Lloyd, Chennai Petroleum Corporation, Kotak Mahindra Bank, Global Offshore, Kolte-Patil Developers, Birla Corporation and Jagran Prakashan are some of the mid-and small-caps, which we believe, will outperform market," he adds.
“One should be exposed to both, the defensive and cyclical sectors. While the defensive sectors have better revenue visibility but have high valuations, the cyclical sectors have low visibility and are available at relatively low valuations. Within these, one should be focused on select stocks. Though valuations are generally on the higher for these sectors, we also believe that, one can find good quality stocks (including mid-caps) in these spaces, which are available at reasonable valuations,” said Dipen Shah, Head- Private Client Group Research, Kotak Securities. As a portfolio stance, Bhuvnesh Singh of Barclays Equity Research continues to advocate defensives. He maintains an overweight rating on IT services, health care, energy and consumer discretionary, while he is underweight on financials, industrials and materials.
Points out Jagannadham Thunuguntla, strategist and head of research at SMC Global Securities: “Markets may touch new highs in the current year post-general elections, attracting offshore funds despite an expected bumpy period for Emerging Markets (EM) as the US Federal Reserve shifts the monetary policy.”
“Moreover, the various efforts taken by the Government and the Reserve Bank of India to bring down Current Account Deficit (CAD), to cushion the free fall of rupee, boost manufacturing and curb rising inflation have indeed sent out positive vibes, are likely to translate into growth numbers in the coming years,” he adds.