BSE MidCap, SmallCap rebound 3% from day's low; TTML, Kaynes soar up to 20%

Shares of Kaynes Technology were up 14 per cent at ₹4,328 on the BSE in intra-day trade as the stock recovered 17 per cent from its 52-week low of ₹3,713.75 hit today.

Shares of smallcap and midcap companies rebounded sharply as the BSE Smallcap and BSE Midcap indices bounced back up to 3 per cent from Tuesday’s intra-day low. Among individual stocks Tata Teleservices (Maharashtra) (TTML), Kaynes Technology, Solara Active Pharma and Le Travenues Technology were the big movers.

 

At 02:55 PM; the BSE Smallcap index was the top gainer among broader indices up nearly 1 per cent, as compared to 0.57 per cent decline in the BSE Sensex. The small index hit an intra-day high of 50,484.10, bouncing back 3 per cent from intra-day low of 49,159.58.  Meanwhile, the BSE Midcap index rebounded by 2 per cent from its intra-day low 45,139. The index hit an intra-day high of 46,090 on the BSE.

 

TTML surged 20 per cent to ₹54.63 on the BSE in intra-day trade on the back of huge volumes. The stock of the telecom company erased its entire previous 2-day 9 per cent decline. As many as a combined 118 million equity shares changed hands on the NSE and BSE.

 

Share price of Solara Active Pharma Sciences moved higher by 13 per cent to ₹622.35, on the back of a near 10-fold jump in trading volumes. Fermenta Biotech share price rallied 12 per cent to ₹295.40 in intra-day trade.

 

Shares of Kaynes Technology were up 14 per cent to ₹4,328 on the BSE in intra-day trade. The stock price of the company recovered by 17 per cent from its intra-day low of ₹3,713.75, also its 52-week low on the BSE. In the past one week, the market price of Kaynes Technology tanked 31 per cent.

 

According to media reports, JP Morgan said that Kaynes Tech is the cheapest stock under their coverage right now, with the price to earnings to growth ratio of 0.7x. It said Kaynes Tech is currently trending below a bear case and is the cheapest in terms of price to earnings to growth. JP Morgan, however, said that there is no change in Kaynes Tech's fundamentals and highlighted the stretched working capital and receivables as key concerns for the stock.

 

While BNP Paribas India in its November report said that it expects EMS growth momentum to continue, but expects margins to remain capped in the near term till the operations from new ventures of OSAT and PCB manufacturing get stabilised, along with a likely pressure on the return profile, gross asset turns and unlikely positive FCF generation. The brokerage firm believes there should be a valuation discount to B2C peers on Kaynes’ lower OCF generation, higher working capital intensity, funding gap and execution risks for new ventures.

 

Meanwhile, as many as 185 stocks from the BSE Smallcap and 11 stocks from the BSE Midcap index hit their respective 52-week lows on the BSE in intra-day deal. The notable stocks from the smallcap include, Bajaj Electricals, Balrampur Chini Mills, Bata India, NDTV, PCBL, Rupa & Company, Reliance Infrastructure, Shakti Pumps, Sula Vineyards and TV Today Network.

 

Failure of the market to hold on to the recent all-time high and absence of fresh triggers for a rally have resulted in some sort of fatigue among investors. The fact that the vast majority of retail investors haven’t participated in this narrow rally dominated by a few largecaps makes the retail disillusionment heavy. Even when the Nifty set a new record, 320 stocks in NSE 500 were trading below their peaks leaving the retail investors with portfolios dominated by mid and small caps unhappy, said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

 

“Briefly, what we are witnessing now is fundamentals exerting influence on the market. Overvalued stocks in the mid and smallcap segments are getting dumped impacting their share prices. There is some more time for this trend to play out. Further correction in midcaps will open up opportunities for long-term investors to slowly accumulate high quality growth stocks in this segment,” said Dr. VK Vijayakumar.