INSUBCONTINENT EXCLUSIVE:
Midcaps and smallcaps are slowly coming out of the cold
At least, the period between Dussehra and Diwali (October 19 to November 7) is a pointer to that.
During this window, the BSE Midcap index
(up 5.61 per cent) won hands down beating BSE Smallcap (up 3.57 per cent) and the benchmark Sensex (up 2.69 per cent)
But so far this year, both midcap and smallcap indices are down up to 24 per cent whereas the 30-share BSE barometer is up 4 per cent
Close to 80 stocks in the midcap space delivered positive returns to investors during the said period, paced by Adani Power that rallied 49
Others did not disappoint as PNB Housing Finance (up 28 per cent), Union Bank of India (up 23 per cent), NBCC (India) (up 22 per cent),
Shriram Transport Finance Company (up 22 per cent), IIFL Holdings (up 21 per cent), Mahindra Mahindra Financial Services (up 19 per cent)
and Oberoi Realty (up 18 per cent) all shaped up well.
In the smallcap universe, Sunil Hitech, Dhanlaxmi Bank, PC Jeweller, Universal Cable
and Usha Martin rallied 40-70 per cent since Dussehra
Top gainers in the Sensex pack during Dussehra and Diwali included Larsen Toubro (up 13 per cent), ICICI Bank (up 13 per cent), Tata
But things changed since October 1
From then till now, midcaps and smallcaps are outperforming the Nifty by almost 4-5 percentage points
Obviously, we have had a major downtick
It is more of a stock specific scenario when you invest in mid and smallcaps
opportunity there and that is where that alpha would be created
On the largecap side, again the stocks or the sub-sectors are changing
Everyone was avoiding IT, but it is IT which did very well
I would say every investor is now clamouring for the retail side of banking
In my view, the well-run corporate banks have already started to outperform and for the next one year, they should definitely
GSM/ASM circular and change in equity taxation
In addition, the liquidity crisis set off by ILFS debt default added to the bad news for NBFCs.
Macro indicators such as oil prices, a
falling rupee, fears of more rate hikes from the RBI, US Fed's rate tightening cycle and global trade war concerns dampened sentiment
That apart, upcoming state and general elections almost killed risk appetite
If you are looking for some investment options in the second rung space with a horizon of at least one year, Nitasha Shankar, Executive
Vice President-Research, YES Securities, says PI Industries, Larsen Toubro Infotech and Bajaj Corp are good to look at.
Abhimanyu Sofat,
Head of Research, IIFL Securities, is upbeat on Mindtree, Petronet LNG and Motherson Sumi.
Siddharth Sedani, Vice President - Equity
Advisory, Anand Rathi Shares and Stock Brokers, favours LT Technology, Sundram Fasteners and Indraprastha Gas.
