For mid-, and small-caps stocks, the rally this time has been different from that in 2008 – their level of participation this time has been minimal.
On Wednesday, the Sensex closed at an all-time high of 21,033.97, up 105 points or 0.5 per cent.
The mid-cap index on the BSE closed at 6,021, up 0.25 per cent, and the small-cap index closed at 5,865, up 0.64 per cent.
On the NSE, the mid-cap index closed at 7,425, up 0.13 per cent, and the small-cap index closed at 3,033, up 0.68 per cent.
According to market experts, mid- and small-cap scrips have not been in vogue as FIIs, the mainstay of the current rally, were buying only large-caps and high quality mid-caps, especially through the exchange-traded funds route. Rikesh Parikh, Vice-President-Institution, Corporate Broking, Motilal Oswal Securities, said: “FIIs are not buying any scrips with market capitalisation below $500 million. This eliminates most of the mid- and the small-cap scrips.”
“FIIs are very particular about corporate governance and avoid companies with stress on working capital and high leverage. Mid- and small-caps usually lag on these parameters,” he added.
Market players say institutional investment in small-caps is difficult and mid- and small-caps usually rally only after the large-cap rally had topped out.
Paras Bothra, Vice-President—Equity Research, Ashika Stock Broking, said: “Only retail investors will be attracted towards mid- and small-caps and that too, after the all-time highs of the markets are breached.”
>raghavendrarao.k@thehindu.co.in
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.