Stock market minnows bid goodbye to 2021 with healthy gains

Small stocks put up a stellar show in 2021 giving returns of 63 per cent amid a dream run in the equity market and are likely to continue the momentum in the New Year also.

Beating pandemic-blues, the Indian equity market posted stunning gains this year reaching several milestones and smaller stocks benefited the most from this strong momentum. From reaching the epic 50,000-mark in January to scaling 62,000-level in October, the BSE Sensex had a memorable journey this year.

In 2021, the midcap index gained 7,028.65 points or 39.17 per cent, while the smallcap index zoomed 11,359.65 points or 62.76 per cent. In comparison, the BSE Sensex jumped 10,502.49 points or 21.99 per cent this year.

The midcap index zoomed to its all-time high of 27,246.34 points on October 19, 2021. In a similar fashion, the smallcap index jumped to its record high of 30,416.82 on the same day. The 30-share benchmark also reached its all-time high of 62,245.43 on October 19.

"Calendar Year 2021 has been an eventful year for the equity markets and various other asset classes. Markets were extremely concerned about the potential impact of the second wave of Covid-19, however, it proved to be less adverse for India as compared to the developed markets," said Shrikant Chouhan, Head - Equity Research (retail), Kotak Securities.

The Sensex had gained 15.7 per cent in the memorable year 2020, where the benchmark index witnessed both heavy selling and massive buying. Small and midcap indices emerged as markets' favourites in 2020. Small and midcap stocks had gained up to 24.30 per cent last year.

"We are in a structural bull market where midcap and smallcap stocks tend to outperform and believe this bull market is likely to continue for at least the next 2-3 years therefore outperformance of midcap and smallcap stocks will also continue to do well however investors have to be very selective from here," Parth Nyati, Founder, Tradingo said.