Small, mid-cap stocks touch 15-month highs

Relatively cheap valuations mean there's still more upside, say analysts

Stocks of mid- and small-sized companies have continued their uptrend and outperformed the benchmark indices in the past one-month period. Analysts said relatively cheap valuations, along with a boost in sentiment, have been pushing up stock prices up in this segment.

On Friday, both the BSE Mid- and Small-cap indices touched 15-month highs, after having run up as much nine and 13 per cent in the last one-month. The BSE Mid-cap Index closed at 7,338, up 0.09 per cent from its previous close.

The BSE Small-cap Index ended at 7,523, higher by 0.7 per cent from its previous close. The BSE Sensex and the NSE Nifty have been up about three and four per cent, respectively, over the same period.
 

Analysts said large-cap names had seen a sharp surge in the first part of the rally, which started in February this year. But since valuations in these stocks were starting to look a bit stretched, the focus had now shifted to mid-caps, they said.

“The large-cap names had moved up quite a bit. That is having an impact on the mid and small-cap names, as valuations are comparatively looking cheaper and attractive,” said Sarabjit Kour Nangra, vice president  (research), Angel Broking. Market participants believed there was still more upside left in these stocks.

On Friday, the biggest gainer among the mid-caps was Gujarat Gas, which hit the upper circuit of 20 per cent during the day. The other gainers were Jaiprakash Power Ventures, Rashtriya Chemicals and Fertilisers, India Cements, Finolex and Videocon Industries, up about five per cent each.

In the small-cap index, out-performers included Dredging Corporation of India, Ansal Properties and Infrastructure, Ruchi Infrastructure, Punjab and Sind Bank and BEML among others have rallied between 7 and 20 per cent on the BSE.

On Friday, the BSE Sensex ended the day down 0.4 per cent at 22,628, while the NSE Nifty ended at 6,776 down 0.3 per cent.