 "Smallcap index hits record high; 63 Moons, Nelco zoom over 50% within 1 mth")
Shares of smallcap companies are on a roll, with the BSE Smallcap index hitting a record high of 57,798.64 in Wednesday’s intra-day trade on a strong rally in textiles, information technology, pharmaceuticals, packaging and infrastructure company stocks.
The BSE Smallcap index has surpassed its previous high of 57,728.08 that it touched on September 24, 2024. The index has rallied 11 per cent from its low of 51,952.79 touched on November 13, 2024.
Stocks of Arvind, ASK Auto, Deep Industries, Arihant Superstructures, Garware Hi-Tech Films, Lloyds Metals and Energy, Nuvama Wealth Management, Styrenix Performance Materials, Suyog Telematics and Zaggle Prepaid Ocean Services from the BSE Smallcap index have hit their respective record highs in intra-day trade today.
Apart from that, of the 946 stocks from BSE Smallcap index, as many as 397 stocks have outperformed the index by surging over 12 per cent since November 13. A total of nine stocks, including Nelco, Greaves Cotton, Lincoln Pharmaceuticals, Ashapura Minechem, Kiri Industries, 63 Moons, Dishman Carbogen Amcis, Himatsingka Seide and Banco Products, have seen their market prices zooming between 50 per cent and 80 per cent.
Despite the consolidation, the continued buoyancy in midcap and smallcap stocks is encouraging. Additionally, rotational participation across most sectors is sustaining the positive sentiment during this phase, say analysts.
According to Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, the biggest positive for the market is the return of the foreign institutional investors (FIIs) and the consequent strength in the largecaps, particularly in banking and IT. He believes that FIIs turning buyers have enthused the retail investors who have been on the defensive after the near 10 per cent correction from the September peak. "Now retail investors are back in action and are chasing many mid and smallcaps. Mid and Smallcap indices have again turned resilient supported by sustained fund flows in these segments. Valuations in these segments are hard to justify but the resilience of these segments might continue, given the strong fund flows into these segments," says Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
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Among the individual stocks, 63 Moons hit a multi-year high of Rs 918.65, and locked in 5 per cent upper circuit. Since November 13, the stock has zoomed 60 per cent. In three months, the stock price of 63 Moons Technologies has more-than-doubled, or zoomed 136 per cent, from a level of Rs 390.30.
A sharp up move in the stock price of 63 Moons Technologies has been triggered after the company said it received a communication on November 8, 2024, from NSEL Investors Forum (NIF) -- an association representing a large number of traders who traded on the Exchange platform of National Spot Exchange (NSEL) -- presenting an indicative proposal for a one-time full-and-final settlement (OTS) on a without prejudice basis.
NIF proposed to settle the case by paying Rs 1,950 crore to all remaining unpaid investors in proportion (prorata) to their balance outstanding claims as on July 31, 2024, subject to legal proceedings against 63 Moons group being withdrawn / settled / closed. CLICK HERE FOR FULL DETAILS
That apart, shares of Greaves Cotton have rallied 53 per cent within a month. On Monday, December 9, investor Vijay Kedia-led Kedia Securities purchased 1.2 million shares, representing a 0.52 per cent stake in Greaves, via the open market on the NSE, bulk deal data from the exchanges showed. Kedia Securities acquired shares at a price of Rs 208.87 per share. The names of the sellers could not be ascertained immediately.
Shares of Kitex Garments, too, hit a multi-year high of Rs 837.30, as they locked in an upper circuit of 5 per cent on the BSE. The stock of the garment company has soared 44 per cent within one month. It zoomed 374 per cent from its June month low of Rs 176.80 on the BSE, as the company’s September quarter (Q2FY25) net profit nearly tripled on higher demand.
Driven by a surge in demand and favourable global market conditions, Kitex Garments reported its highest-ever turnover and profitability in the September quarter. The net profit of the Kochi-based company, the world’s second-largest manufacturer of infant garments, has reached Rs 39.94 crore in Q2FY25, nearly tripling from Rs 13.21 crore in the corresponding period of the previous fiscal.
Earnings before interest, taxes, depreciation and amortisation (Ebitda) margin improved to 27.68 per cent in Q2FY25, compared to 18.25 per cent in Q2FY24. Total revenue grew 58 per cent year-on-year to Rs 220.91 crore, from Rs 139.48 crore in the same period last year.
Kitex Garments' Managing Director, Sabu Jacob said that the unrest in Bangladesh contributed to the financial growth of not only the company but the entire garment industry in India.
According to India Ratings and Research (Ind-Ra), the improving export demand in the textile industry, especially from the US, backed by the China-plus-one sourcing strategy and political instability in Bangladesh, augurs well for the Kitex group.
Meanwhile, according to a Motilal Oswal Financial Services Ltd. (MOFSL) report, the entire ecosystem of the capital market – asset management companies AMCs, Brokers, Exchanges, Intermediaries, and Wealth Managers – will see sustained growth in revenue (17-45 per cent compound annual growth rate (CAGR) over FY24-27).
MOFSL believes that the remarkable growth of the Indian capital market in the past five years marks the beginning of a sustained, multi-year structural uptrend, fuelled by favourable demographic trends as more individuals enter the workforce, contributing to the expansion of the middle class. It says that digital enablers such as E-KYC, UPI, and Account Aggregation have played a key role in facilitating this growth. Regulatory reforms have further strengthened the ecosystem, enhancing transparency and security for investors. Consequently, MOFSL believes that AMCs, exchanges, brokers, wealth managers, and other intermediaries are well-positioned to capitalise on these emerging trends.