It is not just the secondary market that is witnessing a revival in fortunes. Even the initial public offering (IPO) market have roared back to life, with investors submitting bids worth over Rs 2.2 trillion on the three IPOs that wrapped up on Friday. Fashion retailer Vishal Mega Mart (VMM)'s IPO (fifth largest of the year) garnered 27.3x subscription, with bids exceeding Rs 1.6 trillion.
'Exposure to small and midcap stocks exceeded desired levels in many portfolios, prompting rebalancing.'
Investors keen on mid and smallcap stocks but wary of volatility should consider multicap equity schemes over standalone midcap or smallcap schemes.
Investors' wealth on Monday surged Rs 4.21 lakh crore as markets bounced back after five days of fall. The BSE Sensex jumped 602.75 points or 0.76 per cent to settle at 80,005.04. During the day, it surged 1,137.52 points or 1.43 per cent to 80,539.81.
From the 30-share Sensex blue-chip pack, Titan, Adani Ports, UltraTech Cement, Tata Consultancy Services, NTPC, Bharti Airtel, Tech Mahindra, Infosys, Hindustan Unilever and JSW Steel were the biggest laggards.
'Retail investors, who had not seen such a massive correction in the SMID universe since COVID-19, are witnessing something like this for the first time. Panic profit booking may continue.'
'We expect the bull-market phase to still persist, but now led by large-caps which offer better valuation and benefit from FII inflows.'
'We expect continued pressure on midcaps, but any sharp correction looks unlikely from here on.'
Hong Kong has regained its spot as the world's fourth-largest market following a broad market rout in Indian equities. Currently, the Chinese territory's market capitalisation stands at $4.9 trillion versus India's $4.75 trillion, according to data compiled by Bloomberg. In January, the domestic equity markets' market capitalisation had surpassed that of Hong Kong following a spectacular rally in the small- and midcap stocks.
In a falling market, the value of your investment keeps going down. However, the reduction in value is purely a notional loss if you remain invested. When you redeem in a falling market, the notional loss becomes a permanent loss, explains Anamika Pareek.
Analysts are warning of growing risks to the market's sustained momentum, and even to the possibility of consolidation at current levels. Domestically, markets are grappling with several challenges, including a slowing economy, as indicated by the latest GDP data for the July-September (Q2) quarter of 2024-25 (FY25), sticky inflation, fluctuations in the rupee, waning consumption, and high interest rates.
10 largecaps stocks which stand to gain from the Budget.
If the index is unable to sustain above 24,500 levels, technically it can then slip to its 200-DMA placed at 23,365 levels.
Adani Group on Friday raised Rs 4,850 crore from the sale of 13.5 per cent of its stake in Fortune oil maker Adani Wilmar as part of a strategy to exit non-core activities to focus on main infrastructure business. The conglomerate, which last month announced its exit from Adani Wilmar by selling the bulk of its stake to a joint venture partner, had on Thursday announced sale of 17.54 crore shares (13.50 per cent equity) in the company on January 10 (to non-retail investors) and on January 13 (to retail investors) at a floor or minimum price of Rs 275 apiece.
In the last one year, the Sensex has fallen 2.17 per cent, while the BSE midcap index has risen 2.08 per cent. And, there is scope for value picking that can yield good returns.
The Securities and Exchange Board of India (Sebi) is reviewing the current stock categorisation framework followed by actively managed equity mutual funds (MFs) to ensure they are true-to-label. Individuals familiar with the matter said the universe of largecap and midcap stocks could be expanded by 25-50 stocks. The move follows concerns raised by industry players that the current threshold has been skewed following a sharp run-up in the domestic markets after the Covid-19 pandemic.
Most of the action in the markets now lie in the midcaps and smallcaps
All sectoral indices ended lower. BSE Telecommunication tanked 2.18 per cent, metal (1.77 per cent), auto (1.70 per cent), energy (1.64 per cent), oil & gas (1.59 per cent), commodities (1.39 per cent) and financial services (1.37 per cent) were the major laggards.
Adopting overly aggressive strategies without considering risk could lead to significant losses during the next downturn.
The BSE mid-cap and small-cap stocks have outperformed the benchmark Sensex in 2023-24 with about 62 per cent returns, reflecting buoyant investors' sentiment amid robust macroeconomic conditions in the country and impressive quarterly earnings reported by various firms. As per an analysis, the BSE mid-cap gauge jumped 15,013.95 points or 62.38 per cent in the 2023-24 fiscal, while the small-cap index climbed 16,068.99 points or 59.60 per cent. In comparison, the 30-share BSE Sensex raked in a gain of 14,659.83 points or 24.85 per cent during the fiscal under review.
In June, Sensex went up 6.6% and Nifty 6.9%, their best monthly gains since December 2023.
The week's losses wiped out investor wealth worth Rs 18.43 trillion, with the total market capitalisation of BSE-listed firms now at Rs 441 trillion.
This is a good opportunity for long-term investors to pick quality small and midcap stocks at reasonable valuations.
'As we navigate uncertain waters, a conservative approach to largecap investing could provide a strategic advantage.'
Dalal Street had a roller coaster ride in 2024 from shattering record after record to facing heavy correction off-late but equity markets still rewarded investors with positive returns, driven by a surge in domestic fund flows and a resilient macro landscape. The first half of the year saw robust corporate earnings, a surge in domestic flows, and a resilient macro landscape, driving the Nifty to an all-time high of 26,277.35 in September 2024, according to Motilal Oswal Wealth Management.
The IPO filing-to-approval lapsing ratio this year is the best in three years, underscoring the improvement in the IPO market's buoyancy.
From the 30 Sensex firms, Tata Consultancy Services and HCL Technologies dropped over 3 per cent each. Infosys, Tech Mahindra, Sun Pharma and Tata Motors were the other major laggards. Bajaj Finance, Bajaj Finserv, Nestle, HDFC Bank, ICICI Bank and State Bank of India were among the biggest gainers.
The midcap space in the US is red hot. The Russel 200 Index that represents 2000 names in the US midcap space closed the week at 905.24. Recall, the same index topped at 856 in the bull market that ended in 2007. So in fact the midcap index has already made a new high some 5.7 pc over the 2007 peak, says Sonali Ranade
As regards mid-caps and small-caps, analysts suggest investors buy only those stocks of those companies where there is earnings visibility for at least a few quarters and where the valuations have become reasonable.
According to data from BSE, the 4,357 companies available for trade had a combined mcap of around Rs 416 trillion on Tuesday against India's GDP at current prices of Rs 296.6 trillion in FY24.
The upper market capitalisation (mcap) threshold for midcap and smallcap stocks in the mutual fund (MF) industry's revised list of stocks, to be announced this month, is set to see the second-highest yearly rise in the past five years. The list was first announced in 2018, and it has been revised every six months since then. According to estimates released by Nuvama Alternative & Quantitative Research, the upper threshold for the midcap and smallcap universes could come in at Rs 66,700 crore and Rs 21,900 crore in the next list.
Smallcap mutual funds recorded net outflows for the first time in 30 months in March as investors pulled out money after the markets regulator, the Securities and Exchange Board of India (Sebi), warned against "froth" in the mid and smallcap space. Active equity mutual fund (MF) schemes raked in Rs 22,600 crore in March. The March inflow is 16 per cent lower than the two-year high inflow of Rs 26,860 crore in February, shows data from the Association of MFs in India (Amfi).
Investors should use a mix of active and passive funds.
Among major Sensex gainers, Mahindra & Mahindra rose the most by 3.29 per cent. Adani Ports gained 1.26 per cent, Tata Motors by 1.14 per cent, and Axis Bank by 0.92 per cent. Nestle, NTPC, Reliance, ITC Titan, Kotak Bank, Infosys and TCS also gained. HCL Tech, Tech Mahindra, and ICICI Bank were the losers.
'If the majority falls short of expectations, it may prompt initial adjustments in investor sentiment.'
'Ideally, one should not time SIPs.' 'If people churn their SIP portfolios, then they are equating the concept of SIPs to lump sums.'
'As the markets are expected to remain jittery in the near term, we advise investors to use this opportunity to enter quality largecaps from a long-term perspective.'
'Over the next 12 months, it will be difficult to make 15 to 20 per cent return in the markets as the valuations appear stretched.'
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