Street Signs: Smallcap posts double-digit gains, TCS buyback blues and more

Bank Nifty: Scaling heights beyond Nifty’s record?

The benchmark National Stock Exchange Nifty closed at a new record high on Friday. However, the Nifty Bank Index is still 3.3 per cent below its record intraday high of 46,370, reached in July. The Nifty Bank Index has a high correlation with the Nifty, given the significant weight of banks in the latter. Technical analysts believe that if the banking sector gauge manages to cross the significant resistance level of 45,000, it has a fair shot at reaching a new high. The index last closed at 44,814, which was above the 50-day moving average, a sign that some believe is bullish.

Smallcaps: Investors cash in or cash out?

The assets under management of active smallcap schemes experienced a slight decline, even as smallcap indices registered double-digit gains in November. The divergence indicates that investors may have booked profits amid valuation concerns. Smallcap stocks have surged sharply in the past six months, leading to healthy profits for mutual fund investors. While passive funds have gained over 40 per cent in the six-month period, active funds have delivered returns ranging from 20 per cent to 36 per cent. According to Value Research data, active smallcap schemes managed Rs 1,99,376 crore at the end of November, slightly below Rs 1,99,445 crore at the end of October. The National Stock Exchange Nifty Smallcap 100 Index surged 12 per cent last month, marking its biggest monthly advance since February 2021.

TCS buyback blues: Retail investors face lower acceptance ratios

Tata Group flagship Tata Consultancy Services (TCS) initiated its Rs 17,000 crore buyback on Friday. The tendering of shares will be open until Thursday. Market observers suggest that the acceptance ratio for retail investors this time around could be much lower than in previous buybacks. “For the three buybacks between 2017 and 2020, the acceptance ratio for retail investors was 100 per cent. This time around, it is about 15 per cent. Many small investors — those holding shares worth less than Rs 2 lakh — bought shares of TCS ahead of the record date of November 25. This has weighed on the acceptance ratio. The case was similar in 2022 as well,” said an analyst. TCS is buying back shares at Rs 4,150, 18 per cent higher than its last close. An acceptance ratio of 15 per cent implies that those holding seven shares will be able to tender one share.