In charts: Nifty Smallcap 250 outperforms all major indexes in July

Realty, Metals & Energy led the charge, rising 9% each. On the flip side, IT lagged with a modest 1% rise.

The Nifty Smallcap 250 index, which intends to measure the performance of small market capitalisation companies,  outperformed all major indexes in July too and clocked gains of 7.69 per cent, followed by Nifty Midcap 150 at 5.51 per cent, according to the Motilal Oswal Asset Management Company (MOAMC’s) Global Market Snapshot report. In June too, Nifty Smallcap 250 and Nifty Midcap 150 outperformed all major indexes and gained 6.36 per cent and 6.16 per cent, respectively.

Nifty Smallcap 250 Index is computed using free float market capitalization method, wherein the level of the index reflects the totalfree float market value of all the stocks in the index relative to particular base market capitalization value.

In fact, small cap mutual funds have continued to attract inflows for the seventh consecutive month in July and accounted for 55 per cent of the total inflow into the equity category in July.

 

The category received the highest inflows in July among all equity categories.

The category attracted a total inflow of Rs 4,171.44 crore in July, compared to Rs 5,471.75 crore in June.

The asset under management for the small cap category surged by 8 per cent in July to Rs 1.82 lakh crore, from Rs 1.68 lakh crore in June.

Nifty 50 continued its upward momentum with a 3 per cent increase in July. Notably, small caps stole the spotlight by surging 8 per cent

Realty, Metals & Energy led the charge, rising 9 per cent each. On the flip side, IT lagged with a modest 1 per cent rise.

All sectors, excluding the Diversified sector, contributed positively to the NIFTY 500 returns, with the financial services sector making the most substantial impact.

"The sharp rally in the mid and small cap segments has caught investor fancy. Categories like mid and small cap has received significant flows during the month.  While large cap provide stability, mid and small cap provides kicker to the portfolio. Hence they provide the benefit to capitalize on investment opportunities across market segments through one fund," said Himanshu Srivastava, Associate Director - Manager Research, Morningstar India on AMFI monthly data – July 2023.

He, however, cautioned that it would be prudent for investors to have long term investment horizon while investing in equity funds and should not get carried away by short term trends. 

"Mid and small cap funds are relatively risky in nature compared to large caps. Hence, investors should access their risk appetite before investing in these funds, as the allocation should be taken in them in line with their risk appetite," said Srivastava.

Global Market Update

Both Emerging and Developed markets delivered positive performance, with South Africa emerging as a standout performer, surging by an impressive 13 per cent. Within the US market, the NASDAQ 100 and S&P 500 indices recorded gains of 4 per cent & 3 per cent, respectively. IT sector dominated S&P 500's gains.

On the commodities side, the oil market witnessed a significant surge in prices of 16 per cent, the highest since Januaey 2022. Silver & gold prices also rose by 8 per cent & 3 per cent, respectively. The crypto market was an exception to the green wave, as Bitcoin & Ethereum fell by 4 per cent, followed by the collapse of FTX, one of the largest global cryptocurrency exchanges.