Samvat 2079 has been a good year for small and mid cap stocks as equity markets navigated the highs and lows of interest rate uncertainties and geopolitical tensions.
The smallcap indexes have surged over 30% during this period, compared with 9% gain in benchmark Sensex.
Since last Diwali, as many as 172 smallcap stocks at least doubled investors’ wealth. Of these 172 stocks, 42 companies more than tripled the investments.
The highest return in the year was well past the 1000% mark with Jai Balaji Industries rallying 1,279% during the year. It was followed by Lloyds Enterprises (722%), Jindal Saw (516%), Magellanic Cloud (473%) and Apollo Micro Systems (432%).
Multibagger returns among the midcaps were lower, compared with the smallcaps, with just 9 companies rising over 100% in the last one year period. REC Ltd topped the charts in the midcap segment by delivering 247% returns in Samvat 2079, closely followed by IRFC (247%) and Power Finance Corp (240%).
Other notable names which kept investors happy in the year include Suzlon Energy (337%), Jindal Stainless (258%), Apar Industries (252%), Lloyds Metals (180%), Sonata Software (158%), Punjab and Sind Bank (152%) among others.
The strong show by midcap and smallcap stocks is partly attributable to strong interest from domestic investors, particularly the retail ones.
The retail investments through SIPs have soared during the year with the contribution reaching Rs 1 lakh crore mark so far in FY24. For instance, out of Rs 17,000 cr SIP flows last month, 30% of the money is going to mid and small-cap funds, according to experts.
What should investors do?
While some analysts say small and midcap stocks have run up quite a fair bit, others are still bullish notwithstanding the high valuations.
Good quality small- and mid-caps can still get buying power and rise even higher over the next year,” said Sunil Subramaniam of Sundaram Mutual Fund.
“The mid and small-cap rally is partly driven by retail exuberance and since the valuations in this broader market is high, investors have to exercise some caution,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Overall, most experts are in consensus that the market is poised to sustain its prevailing bullish momentum into Samvat 2080, barring a few hiccups.
“Equity markets are likely to exhibit strength in the coming Samvat. Recent correction on account of hardening US yields and geo-political uncertainties in the Middle-East give an investment window to long term investors,” said Kaushik Dani, Fund Manager,
Abans.
“We expect markets to deliver a return of around 15% till next Diwali on the back of robust corporate earnings, strong domestic flows and reformist government measures,” said Manish Chowdhury, Head of Research, StoxBox.
Sectorally, analysts expect financials, autos to do well and even contrarian bets on the IT space may not be that bad.
“Sustained FII selling in financials, which is impacting the sector, will be only temporary. For investors with a 2-year time horizon, the leading private banks and three or four PSU banks are good buys with good return potential,” Vijaykumar noted.
“We believe that strong order book, premiumization trend and expected recovery in rural demand would provide tailwinds to the larger auto space including PVs and 2Ws. In IT, we believe that most of the negatives are already priced in and improved operational performance and strong order pipeline bodes well for the sectoral recovery going ahead,” said Chowdhury.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
