Street signs: Liquidity boost for small-caps, tailwind for gold, and more

Liquidity boost for small-caps

Several small-caps and mid-caps are back on traders’ radar after stock exchanges eased circuit filters on them. Last week, 36 stocks saw their circuit filters go up from 5 per cent to 20 per cent. Nearly 200 saw theirs going up from 10 per cent to 20 per cent. “The 5 per cent circuit limit was too restrictive. It sucked out liquidity from many counters. A 20 per cent limit still offers flexibility for traders, as well as investors, to react to any development,” said an analyst. Exchanges have revised circuit limits on 645 stocks, of which only 10 have seen narrowing of limits.

Belated gains for FPO investors

Those invested in YES Bank’s Rs 15,000-crore follow-on public offering (FPO) had something to cheer last week. Shares of the troubled lender ended at Rs 14.1 on Friday, a gain of 17.5 per cent over its FPO price of Rs 12. Last month, YES Bank’s FPO had failed to garner full subscription, forcing SBI Caps to underwrite the unsubscribed portion. After the listing of new shares on July 27, the YES Bank stock had even slipped below its issue price. Market players say recent gains are an encouraging sign. “Huge supply of new shares has entered the market. Many FPO investors are looking to exit. Despite this, the stock has made positive strides. This means the momentum is strong in the counter,” said an analyst.

Under-ownership tailwind for gold

After a stellar 43 per cent jump this year, there seems to be more steam left in gold. Analysts say under-ownership is expected to be a tailwind for gold prices. Despite a jump in investor flows and the appreciation in the yellow metal's price, the share of gold exchange-traded funds (ETFs) in overall ETFs is below the 2007-08 Global Financial Crisis levels. Chirag Mehta, senior fund manager-alternative investments, Quantum Mutual Fund, says: “The share of Gold ETFs in total ETF assets had jumped from 3 per cent to 8 per cent in the aftermath of the Global Financial Crisis before dwindling to 1 per cent levels in the following years. Currently, it is at 3 per cent, indicating significant potential for Gold ETF asset expansion going forward.”