Over 90% BSE 200 components posted gains; 116 jumped over 10% in November

The surge in the market in November has benefited a majority of stocks. Over 90 per cent of the BSE 200 components posted gains last month and nearly 116 stocks soared more than 10 per cent each.

The BSE 200 index -- a gauge for the performance of top 200 companies — rose 12 per cent in November, slightly higher than the benchmark Sensex, which rose 11.4 per cent. The BSE Midcap and Smallcap indices outperformed with a gain of over 13 per cent each.

Market players said several stocks in the boarder markets were trading at attractive valuations. However, many leaky vessels also have gained in the market surge and investors need to be careful, they added.

“There are many small- and mid-caps which were beaten down and until recently were hovering around their 2018 levels. And there is still value in those shares. But unfortunately, now the stocks with no value are rallying more than quality stocks. This is due to speculative bets by retail investors. This is a sign of a bubble being built up. All stocks run-up during the fag end of the bubble. This will fizzle out, but it's difficult to predict when it will happen," said G Chokkalingam, founder, Equinomics.

When the markets bounced from the Covid-19 lows in March, it was the large-caps that led the gains. As the markets gained momentum, the rally has gotten more broad-based. In the past six months, the Sensex has gained 36 per cent, while the BSE Midcap and BSE Smallcap indices have gained 43 per cent and 55 per cent, respectively.

"There was a big flush of liquidity underpinned by the decline in the dollar index. Typically, in a rising market, large-caps go up first, followed by small- and mid-caps. For that reason, the rally has broadened. A lot of mid-cap companies beat profit estimates in the September quarter. After nine years, we have seen a structural change happening in terms of business dynamics,” said Abhimanyu Sofat, head of research, IIFL.

Overseas investors pumped in a record $8.3 billion into domestic stocks in November. Foreign portfolio investor (FPI) flows are largely restricted towards the large-cap universe. However, market observers say the flows have percolated to the broader market, leading to the outperformance.

As many 116 components of the BSE 200 index gained more than 10 per cent each. Gains and losses were in lower single digits for the remaining 84 stocks.

Adani Gas, Shriram Transport, Cholamandalam Investment, and SAIL were among the top gainers in November—each posting a gain of more than 40 per cent.

The stocks in the boarder universe could have more steam left in them. “A lot of mid-caps will continue to go up, but there can be consolidation for some period. December may not be that good in terms of flows due to the holiday season. But mid-caps over three months should do very well,” said Sofat.