MUMBAI: The small and mid cap stocks have stolen the limelight on the domestic bourses over the last one month outperforming their large cap peers by huge margins. The Nifty small cap 100 index has soared 11.88 per cent while the Nifty Free Float Midcap index has surged 5.45 per cent as against the Nifty’s gain of 0.66 per cent. Similarly, the BSE small cap and mid cap index have generated a return of 6.17 per cent and 4.05 per cent as compared to 0.41 per cent gain posted by Sensex during the last one month.
While the small and mid caps are likely to continue with their rally in the near term, experts feel that it’s time to book profits as many of these stocks have run ahead of their fundamentals. “It is better to book profits and exit these counters as many of them have rallied ahead of their fundamentals. “While in the near term, small and mid cap stocks could continue with their positive momentum, it would be risky to enter those counters at the current stage,” said Ambareesh Baliga, a senior research analyst.
With FPIs taking a back seat post Brexit, Mr Baliga pointed out that it was domestic investors who dominated the activity in the domestic equity markets. “A major portion of that money has flown into these small and mid cap counters. However, from a medium to long term perspective, Nifty is expected to perform though intermittent corrections can’t be ruled out,” he added.
“The small and mid cap stocks are high beta stocks and they tend to move faster than large cap stocks in a risk-on environment,” said Jagannadham Thunuguntla, head of fundamental research at Karvy Stock Broking. However looking ahead, Mr Thunuguntla said that the markets are likely to see more stock specific actions due to India Inc’s Q1FY17 results.
