new Delhi: small cap stock Made huge gains by delivering up to 36.64 per cent returns in FY21-22, outperforming the larger benchmark gauges and experts believe they may continue to outperform in FY23.
Markets faced several adverse conditions in the latter half of the last financial year with the emergence of geopolitical tensions, inflation concerns and selling of FIIs.
Analysts said the first half of the last fiscal was very good, while the market entered consolidation in the second half with high volatility.
BSE Smallcap Index The financial year 2021-22 jumped 7,566.32 points or 36.64 per cent, and the midcap gauge rose 3,926.66 points or 19.45 per cent.
in comparison, Sensex The financial year 2021-22 closed with a gain of 9,059.36 points or 18.29 per cent.
“The market is climbing all the walls of worry and is showing the strong resilience that characterizes a strong bull market. We are in a structural bull market, however, intermediate corrections will be a part of this journey.
“Midcap and smallcap stocks outperformed in a classic bull market, and I believe they can continue to outperform in FY23 as the Indian economy gears up for multi-year growth despite short-term hiccups. ,” he said. Partha NyatiFounder, Tradingo.
Nyati further added that historically, April has been one of the best months for the equity market, especially for midcaps and smallcaps, as the BSE smallcap index ended in the green for 14 out of the last 15 years, with an average 7 percent increase.
“Therefore, we can expect a great start to FY23 for the broader market,” Nyati said.
After hitting its 52-week low of 20,282.07 on April 19, 2021, the Smallcap index hit an all-time high of 31,304.44 on January 18 this year.
The midcap gauge had hit a record high of 27,246.34 on October 19 last year. It had hit its 52-week low of 19,423.05 on April 19, 2021.
The Sensex reached its all-time high of 62,245.43 on October 19, 2021.
Vinod Nair, head of research Geojit Financial Services, said, “The broad market correction in the last 5-6 months has made Mid and Smallcap a good investment proposition for FY23. Comparison of Large and Midcap on the basis of Smallcap forward earnings growth.” However, volatility cannot be avoided in the short term as there remains uncertainty about high inflation, slowdown in the economy and fall in future earnings.
According to Nair, during great periods and backed by liquidity, smallcaps have this benchmark to outperform the major indices.
“A solid recovery in the domestic economy and strong inflows from retail and mutual funds gave them a better performance this time around,” he said.
According to market analysts, smaller stocks are usually bought by local investors, while foreign investors focus on blue-chips or larger firms.
Nyati said continued selling by FIIs in the second half kept large-cap stocks on the back foot, while domestic money continued to support the midcap and smallcap baskets.
The strong resilience of the Indian economy in tough times is mainly due to the outperformance of midcap and smallcap stocks, and the continued confidence of domestic money in our economy is another factor that helped the broader market stay ahead, he added.
“In our view, the post-pandemic onset provides a huge runway for growth for many small and midcap stocks as they rise sharply,” said S Ranganathan, head of research, LKP Securities.
In FY21, the BSE Smallcap index had jumped 11,0040.41 points or 114.89 per cent, while the Midcap index was up 9,611.38 points or 90.93 per cent.
In comparison, the 30-share BSE benchmark had seen a gain of 20,040.66 points or 68 per cent during the 2020-21 financial year.
Markets faced several adverse conditions in the latter half of the last financial year with the emergence of geopolitical tensions, inflation concerns and selling of FIIs.
Analysts said the first half of the last fiscal was very good, while the market entered consolidation in the second half with high volatility.
BSE Smallcap Index The financial year 2021-22 jumped 7,566.32 points or 36.64 per cent, and the midcap gauge rose 3,926.66 points or 19.45 per cent.
in comparison, Sensex The financial year 2021-22 closed with a gain of 9,059.36 points or 18.29 per cent.
“The market is climbing all the walls of worry and is showing the strong resilience that characterizes a strong bull market. We are in a structural bull market, however, intermediate corrections will be a part of this journey.
“Midcap and smallcap stocks outperformed in a classic bull market, and I believe they can continue to outperform in FY23 as the Indian economy gears up for multi-year growth despite short-term hiccups. ,” he said. Partha NyatiFounder, Tradingo.
Nyati further added that historically, April has been one of the best months for the equity market, especially for midcaps and smallcaps, as the BSE smallcap index ended in the green for 14 out of the last 15 years, with an average 7 percent increase.
“Therefore, we can expect a great start to FY23 for the broader market,” Nyati said.
After hitting its 52-week low of 20,282.07 on April 19, 2021, the Smallcap index hit an all-time high of 31,304.44 on January 18 this year.
The midcap gauge had hit a record high of 27,246.34 on October 19 last year. It had hit its 52-week low of 19,423.05 on April 19, 2021.
The Sensex reached its all-time high of 62,245.43 on October 19, 2021.
Vinod Nair, head of research Geojit Financial Services, said, “The broad market correction in the last 5-6 months has made Mid and Smallcap a good investment proposition for FY23. Comparison of Large and Midcap on the basis of Smallcap forward earnings growth.” However, volatility cannot be avoided in the short term as there remains uncertainty about high inflation, slowdown in the economy and fall in future earnings.
According to Nair, during great periods and backed by liquidity, smallcaps have this benchmark to outperform the major indices.
“A solid recovery in the domestic economy and strong inflows from retail and mutual funds gave them a better performance this time around,” he said.
According to market analysts, smaller stocks are usually bought by local investors, while foreign investors focus on blue-chips or larger firms.
Nyati said continued selling by FIIs in the second half kept large-cap stocks on the back foot, while domestic money continued to support the midcap and smallcap baskets.
The strong resilience of the Indian economy in tough times is mainly due to the outperformance of midcap and smallcap stocks, and the continued confidence of domestic money in our economy is another factor that helped the broader market stay ahead, he added.
“In our view, the post-pandemic onset provides a huge runway for growth for many small and midcap stocks as they rise sharply,” said S Ranganathan, head of research, LKP Securities.
In FY21, the BSE Smallcap index had jumped 11,0040.41 points or 114.89 per cent, while the Midcap index was up 9,611.38 points or 90.93 per cent.
In comparison, the 30-share BSE benchmark had seen a gain of 20,040.66 points or 68 per cent during the 2020-21 financial year.