NEW DELHI: Smaller stocks have emerged as markets’ favourites so far this year, giving big returns to investors amid optimism over the country’s macroeconomic fundamentals and surge in domestic liquidity.
Till July 16 this year, the BSE midcap gauge has jumped 10,984.72 points or 29.81 per cent, while the smallcap index has surged 11,628.13 points or 27.24 per cent.
In comparison, the BSE 30-share benchmark Sensex has rallied 8,476.29 points or 11.73 per cent so far this year.
“The primary reason for the outperformance of midcap and smallcap stocks is the surge in domestic liquidity. A substantial amount of domestic money is flowing into these segments through mutual funds, portfolio management services (PMS), and direct investments,” said Sunil Nyati, Managing Director, Swastika Investmart Ltd.
We are currently in a structural bull market, where midcap and smallcap stocks tend to outperform, he noted.
“While largecap stocks have also performed well, they have lagged behind midcap and smallcap stocks due to selling by foreign institutional investors (FIIs),” Nyati added.
Stock markets are closed on Wednesday on account of Muharram.
Experts said equity markets are experiencing a prolonged bull run, and it is during this time that the midcap and smallcap segments tend to outshine their larger counterparts.
“We are currently in a global bull market led by the US, while our market is outperforming other emerging markets due to strong fundamentals and abundant domestic liquidity.
