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.”