Neal Bhai Reports — Mid- & Small-caps Outsmart Blue Chips — Midand small-cap shares outperformed bluechips on Wednesday after staging a late rebound that helped them erase a portion of the losses they incurred in the previous two trading days.The mid-cap index rose 1.3% and the small-cap index gained 1.2% as investors continued to prefer smaller shares after the recent sell-off despite worries about rich valuations.
Mid-cap index fell 2.5% on Friday and Monday. Fund managers said those mid-cap shares that have not moved in a big way or have strong prospects are the ones that rebounded on Wednesday .
Reliance Capital was among the best performing midcap stocks, rising over 8% on Wednesday . Gitanjali Gems was the biggest small cap gainer surging almost 20% on the same day .
“With the Indian economy growing, there will be some companies that grow faster,“ said Sunil Singhania, CIO for equity investment at Reliance Mutual Fund. “However, there is one category of mid and small cap companies that are overvalued. But if one has a 2-3 year horizon, one can have a good run.“
The midcap index has risen 2.35% in the last month and 15.07% in the last three months. The smallcap index on the other hand has risen 4.08% in the last month. “Look out for companies involved in niche financing like AMCs or NBFCs, specialised engineering companies like auto ancillaries and infrastructure players and those companies that will benefit from consumption growth,“.
The Sensex was flat on Wednesday, ending 0.07% up at 28,372 points while Nifty closed at 8,725, up 0.13%. This was on account of nervousness globally that sparked a strong sell-off. “Profit booking was seen in midcaps as risks of a rate hike in the US sent shockwaves in emerging markets,“ said Nitasha Shankar, vice-president, research, Yes Securities. “There are still pockets within the midcap space available at attractive valuations. This is visible in the recovery seen on Wednesday as investors are using dips as buying opportunities.“