Small stocks give better returns this year

While the small-cap index of the BSE has given a return of 53.21%, the mid-cap index followed with 36.87%

Helped by smart participation from retail investors and bullish stock market sentiment, the mid-cap and small-cap indices of the BSE have given handsome returns to investors, outperforming their large-cap peers so far this year.

While the small-cap index of the BSE has given a return of 53.21 per cent, the mid-cap index followed with 36.87 per cent. In comparison, the gain in the blue-chip 30-scrip index, Sensex, has been about 23.41 per cent.

Market experts said that during the times of uncertainty one witnesses greater losses in mid and small-cap counters. But when markets rally, these stocks move ahead of the front line stocks.

The Sensex hit all-time level of 26,300.17 on July 25.

The mid-cap index touched its one-year peak of 9,596.88 on July 7, while the small-cap index recorded its 52-week high of 10,624.24 on July 8.

Analysts attributed surge in different market segments to robust investor sentiment following the formation of a new government and foreign investors who have been betting big on the Indian equities.

In 2013, even as the stock markets recorded handsome gains, driven by large blue-chips, small and mid-cap stocks had declined as much as 12 per cent.

Retail investors are major participants in mid-cap and small-cap stocks and activity in this segment has increased over the past few months.

Marketmen say smaller stocks are generally bought by local investors, with overseas investors focusing on blue-chip shares.

The mid-cap index tracks companies with a market value that is on average one-fifth of blue-chips or large firms. Small-cap firms are almost a tenth of that.