Small-, mid-cap indices outperform Sensex

The Bombay Stock Exchange (BSE) small- and mid-cap indices have outperformed the benchmark equity index, Sensex, in the past one year. Both the indices are currently hovering around their 52-week highs and both have given over 25 per cent higher return than the Sensex.

The BSE Mid-cap index, which comprises stocks of 222 companies, rose 127 per cent from its 52-week low of 2,547 on March 9 to its current level of 5,794. The 52-week high of the index is 5,888, hit in September last year.

The BSE Small-cap index, with 466 company stocks, gained 141 per cent from its 52-week low of 2,864 on March 9 to its current level of 6,907. It had touched a 52-week high of 7,033 on September 8 last year.

Mid-cap and small-cap indices track the performance of companies with smaller market capitalisation compared to those whose stocks comprise the Sensex.

The 30-share Sensex, meanwhile, has risen 105 per cent from its 52-week low of 7,697 on October 27 last year to its current level of 15,781. The index had touched its 52-week high of 16,002 on August 4 this year.

According to market players, small- and mid-cap stocks often gather momentum after the Sensex, and a sharper rally than the key benchmark is an indication that most of the forntline stocks are near the peaks of their ongoing rally.

“It has been noticed in the last few days that Sensex shares are in a consolidation phase and that punters are playing in the cheaper small- and mid-cap stocks,” said the research head of a leading Mumbai-based brokerage.

Analysts pointed out that while some of the stocks were genuine value buying, some counters were pure operator play. Another important reason for a pause in the momentum of the frontline stocks was the absence of active foreign institutional buying in August.

According to the BSE data, foreign institutional investors (FIIs) had been net sellers in the cash segment of the equity market to the tune of Rs 4,050. 47 crore, they said.

This week so far, while the Small-cap index has risen 4 per cent and the Mid-cap index 2.06 per cent, the Sensex has managed to gain only 1 per cent.

FIIs, however, have been active players in the forntline stocks and have net purchases of nearly $4 billion so far this year.