Smaller stocks have rewarded investors with high returns as the smallcap index jumped by 29.72 percent so far this fiscal, outshining its bigger benchmark gauge. An analysis of the performance of smaller stocks in the first four months of the ongoing fiscal revealed that the BSE smallcap index has zoomed 6,137.29 points or 29.72 percent, while the midcap index has jumped 2,905.91 points or 14.39 percent.
In comparison, the 30-share BSE benchmark Sensex has gained 3,077.69 points or 6.21 percent. "The sheer variety across themes and sectors aided by a low-base effect made them low hanging fruits as valuations vis-a-vis growth made a case in their favour," said S Ranganathan, Head of Research at LKP Securities.
The midcap index zoomed to its record high of 23,207.51 on July 23, and the smallcap index reached its all-time high of 26,895.93 on July 30. The BSE benchmark had reached its lifetime high of 53,290.81 on July 16. VK Vijayakumar, Cheif Investment Strategist at Geojit Financial Services said, "Market performance has been incredible. In fact, the broader market has done much better than the benchmark indices. The outperformance is stunning, giving excellent returns to investors in the broader market." Analysts said that pickup in economic activities and ramp-up of vaccination have also helped the market rally.
Last fiscal, the BSE smallcap index zoomed 11,040.41 points or 114.89 per cent, while the midcap jumped 9,611.38 points or 90.93 percent. In comparison, the BSE benchmark clocked 20,040.66 points or 68 percent gain last fiscal. According to market analysts, smaller stocks are generally bought by local investors while overseas investors focus on bluechips or large firms.
The midcap index tracks companies with a market value that is, on average, one-fifth of blue-chips or large firms. Smallcap firms are almost a tenth of that.