Even as the Sensex and Nifty have hogged the limelight as they scale new peaks, the broader indices have outperformed as investors eye more lucrative returns in the universe beyond blue-chip stocks.
A look at the broader indices — some of which include as many as 500 companies from the midcap and smallcap space — shows that the gains in some cases have been twice as much when compared with the 30-company Sensex.
The Sensex and the 50-share Nifty have gained 13.6% and 15.1% respectively in 2017. In the same period, the BSE Smallcap index has climbed almost 30%, while the BSE Midcap index has surged 24.3%. BSE Midcap members like Edelweiss Financial Services, Vijaya Bank, IIFL Holdings, Rashtriya Chemicals & Fertilizers, Godrej Properties, DCM Shriram, V-Guard Industries, Motilal Oswal Financial Services, Jaypee Infratech and Dalmia Bharat have all gained about 75%-100%.
“Investors can still invest in the midcap and smallcap space while choosing the stocks carefully,” said Amarjeet Maurya, assistant VP (Research - Midcap), Angel Broking. “One should invest based on parameters like profitability and earnings growth. Even if there is a correction in the broader markets, companies with stable fundamental factors will not correct as much,” he said.
In comparison, the best gains in the Sensex pack have been about 30% with blue-chips like Asian Paints, L&T, Reliance Industries and Maruti Suzuki all gaining about 25%-30%.
‘Different times’
“The rally is different this time as during some of the earlier cycles, the economy was red-hot with high credit growth, strong IIP numbers along with large infra projects,” said Manish Gunwani, deputy CIO - equity, ICICI Prudential AMC. “This time though, there is a lot of unutilised capacity and the earnings recovery cycle has not started yet,” he added.
