Mid & Smallcap Indices Surge; 20+ Stocks Gain 10-50%
After a three-week losing streak, the BSE mid and smallcap indices finally showed some signs of strength, breaking the bearish trend that had been weighing them down. The BSE midcap index, which had been struggling to gain traction, finally managed to rise by 1% for the week, while the BSE small-cap index rose by 0.4%. But what’s even more impressive is the fact that over 20 major small-cap and mid-cap stocks saw gains ranging from 9.85% to 54.96%, with most clustering between 10-20%.
This sudden surge in mid and smallcap indices is a welcome respite for investors who had been getting increasingly nervous about the state of the market. The BSE midcap index had been trading in a narrow range for several weeks, struggling to break above the 20,000 mark. The BSE small-cap index, on the other hand, had been trading in a downward trend, losing over 10% in just a few weeks.
So, what led to this sudden reversal in fortunes for mid and smallcap stocks? There are several factors that could have contributed to this rally. Firstly, the Indian economy has been showing signs of recovery, with GDP growth rate increasing to 7.3% in the second quarter. This has led to an increase in investor confidence, with many analysts predicting a revival in corporate earnings.
Secondly, the recent interest rate cuts by the Reserve Bank of India (RBI) have made borrowing cheaper, leading to an increase in consumer spending and business investment. This has had a positive impact on mid and smallcap stocks, which are often more sensitive to changes in interest rates.
Thirdly, the government’s initiatives to boost the economy, such as the reduction in corporate tax rates and the increase in the FDI limit in defense and construction sectors, have also helped to boost investor confidence. These measures have led to an increase in foreign investment flows, which has helped to support the rupee and reduce inflation.
Some of the major stocks that gained in the mid-cap space include:
- Adani Ports & SEZ, which gained 14.55%
- IndusInd Bank, which gained 13.45%
- Bajaj Finance, which gained 12.45%
- M&M Financial Services, which gained 11.85%
- Avenue Supermarts, which gained 10.95%
In the small-cap space, some of the major gainers include:
- Kalyan Jewellers, which gained 54.96%
- PC Jeweller, which gained 34.96%
- Saurashtra Cement, which gained 28.45%
- Gem & Jewellery, which gained 25.45%
- Shoppers Stop, which gained 23.85%
While it’s impossible to predict with certainty whether this rally will continue, there are several reasons to be optimistic about the mid and smallcap space. Firstly, the Indian economy is expected to recover in the coming quarters, which should lead to an increase in corporate earnings.
Secondly, the recent interest rate cuts by the RBI have made borrowing cheaper, which should lead to an increase in business investment and consumer spending. This should have a positive impact on mid and smallcap stocks, which are often more sensitive to changes in interest rates.
Thirdly, the government’s initiatives to boost the economy, such as the reduction in corporate tax rates and the increase in the FDI limit in defense and construction sectors, have also helped to boost investor confidence. These measures have led to an increase in foreign investment flows, which has helped to support the rupee and reduce inflation.
In conclusion, the recent rally in mid and smallcap indices is a welcome development for investors. While it’s impossible to predict with certainty whether this rally will continue, there are several reasons to be optimistic about the mid and smallcap space. With the Indian economy expected to recover, interest rates expected to remain low, and the government’s initiatives to boost the economy, there are several opportunities for investors to make a profit in this space.
