BSE SmallCap index hits fresh high; eyes 35,000 after surging 28% in FY24

Around 40 stocks on the BSE SmallCap index scaled new record highs, including The Anup Engineering, Bector Food, Cholamandalam Fin, CMS Info, CreditAccess Grameen, RPG Life, Escorts, Inox Green

The broader markets held strong relative strength over benchmark indices in Monday’s intra-day trade with smallcaps leading the charge. The BSE SmallCap index jumped nearly 1.2 per cent to hit a record high of 34,954 intra-day, merely 50 points away from topping the 35,000 level. 

The BSE MidCap index too rose 0.7 per cent intra-day to touch a new high of 30,372, led by up to 7 per cent gains in IRFC, Ajanta Pharma, Adani Power, REC, Laurus Labs, Supreme Industries, ACC, IDFC First Bank and NMDC, among others.  

Monday’s outperformance in smallcaps was led by volume toppers such as Gujarat Fluorochemicals, Suzlon Energy, Rail Vikas Nigam, Lloyd Steel, Can Fin Home, Indiabulls Housing Finance, Reliance Power, BLS, Hindustan Copper and Religare Enterprises, which jumped 2-20 per cent. 

Besides, around 40 stocks on the BSE Smallcap index also scaled new record highs. These included The Anup Engineering, Bector Food, Cholamandalam Financial Holdings, CMS Info system, CreditAccess Grameen, Esab India, Escorts, Inox Green, Kolte Patil Developers, Mishra Dhatu Nigam, Newgen Software and PSP Projects. These stocks were trading as much as 7 per cent higher. 

In terms of breadth, of the total 962 smallcap stocks on the index, 680 advanced while 276 declined. 

In the financial year 2024, the broader markets have maintained a firm lead over largecaps. The S&P BSE Sensex, S&P BSE Midcap, and S&P BSE Smallcap indices have rallied 12 per cent, 25 per cent, and 28 per cent, respectively, since April this year, ACE Equity data showed.

The sharp rally in the smallcap pocket this year comes after a sharp 13 per cent drop recorded in the last financial year. 

Cheap valuations have been attributed as one of the major reasons for this outperformance by analysts, but some experts are now voicing caution on this segment given the massive rally from March. 

“Investors have to be careful chasing small-caps, which are now in overvalued territory. Largecaps, even when richly valued, are safe, unlike risky small-caps,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.