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BSE Midcap, Smallcap indices up 21% each in less than 3 months; what should investors do? Here's what experts say
Since November 2023, the Sensex and the Nifty 50 have jumped 14 per cent and 15 per cent respectively while the BSE Midcap and Smallcap indices have jumped 21 per cent each. Since November last year, the domestic market has been witnessing robust gains, propelled by impressive domestic macroeconomic indicators, expectations of political stability following the General Elections, and the anticipation of interest rate cuts by the US Fed and the RBI this year. Although the benchmark indices- the Sensex and the Nifty 50- have registered substantial double-digit growth in the last two-and-a-half months, the remarkable outperformance of mid and small-cap indices is noteworthy. This exceptional performance stands out even in the face of growing apprehensions about their valuations. Since November 2023, the Sensex and the Nifty 50 have jumped 14 per cent and 15 per cent respectively while the BSE Midcap and Smallcap indices have jumped 21 per cent each. Some small-cap stocks such as Gallantt Ispat, GTL Infrastructure, Kesoram Industries, Inox Green, Wockhardt, Praveg, Inox Wind and Navkar Corporation have jumped over 100 per cent since November. In the midcap space, stocks such as HPCL, Power Fin Corp, BHEL, GlaxoSmithKline Pharmaceuticals, IRFC, YES Bank, New India Assurance Company, GMR Airports and Macrotech Developers have jumped over 50 per cent each in the same period. Why are midcaps and small-caps rising? Experts observe that mid and small-cap stocks have been witnessing strong interest from retail investors as they exhibited notable earnings growth. Moreover, investors looking for high-growth opportunities are lapping up these stocks. Shrey Jain, Founder and CEO of SAS Online pointed out that after a spectacular show in the calendar year 2023 (CY23), investors’ interest has gone up in mid and small-cap stocks. "Investors looking for high-growth opportunities are lapping up these stocks. A look at net inflows in equity mutual funds makes it amply clear that individuals investing through mutual funds have also preferred small-cap and mid-cap schemes over large-cap schemes. For example, in December 2023, small-cap schemes and mid-cap schemes received net inflows of ₹3,857 crore and ₹1,393 crore respectively, compared with a net outflow of ₹280 crore from large-cap schemes. Investors lack appetite for large-cap stocks whereas there is a clear preference for mid and small-cap stocks," said Jain. Source - Mint
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Mohamed Azharuddin
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