Mid-cap index hits fresh record high

Ashok Leyland, Cummins India, GlaxoSmithKline Pharma, Indiabulls Housing and Motherson Sumi are among the midcap stocks to hit record highs.

The Bombay Stock Exchange (BSE) S&P BSE Midcap index hit a fresh record high, while the S&P BSE Smallcap index touches seven-and-half year high as investors bought fundamentally sound stocks in the broader market.

The BSE midcap index has touched a fresh record high of 11,605, while the smallcap index hit an intra-day high of Rs 12,190, its highest level since January 18, 2008. The smallcap index touched a lifetime high of Rs 14,239 on January 1, 2008 during intra-day trade.

At 11:59 AM the S&P BSE Sensex index, up 0.76% or 214 points at 28,286, is 5.8% away from its all-time high of 30,025 touched in intra-day trades on March 4, 2015.

The Reserve Bank of India (RBI), in its third bi-monthly Monetary Policy on August 4, left key policy rates unchanged (repo rate at 7.25% and cash reserve ratio at 4%). The policy tone was dovish, with inflation projections for Jan-Mar’16 lower by around 0.2% and risks broadly balanced around the Jan’16 target of 6%.

The RBI has maintained its growth outlook despite downgrades in the global projections. Weak commodity prices could favor real incomes although much needs to be done to ease supply constraints. The projected output growth for 2015-16 has been retained at 7.6%.

 “Despite concerns over domestic inflation drivers, the RBI expects mitigating factors coming into play, and signaled more rate cuts by reintroducing the phrase ‘accommodative stance of monetary policy’. We expect a further 50 basis points cut in FY16,” said Religare Institutional Research in client note.

Meanwhile, the midcap and smallcap indices have surged by 15% each since June 11, when the Sensex hit a recent low of 26,371; the Sensex has gained 7% during the period.

About 35 stocks from the smallcap index, including Ceat, MRF, SRF, Tata Elxsi and Gillette India have hit lifetime highs.

Ashok Leyland, Cummins India, GlaxoSmithKline Pharmaceuticals, Indiabulls Housing Finance and Motherson Sumi Systems are among the midcap stocks to touch record highs on the BSE today. 

The domestic mutual funds (Rs 13,528 crore) and foreign institutional investors (Rs 2,905 crore) have collectively pumped in a net Rs 16,433 crore in equities, the Securities and Exchange Board of India (Sebi) data shows.