Markets News

Mid caps and small caps are set to outperform

 With Sensex and NIFTY on the rising trend, Mid- and small-cap stocks are on track to be the best-performing share categories.

Experts suggest that the small & midcap spaces are a play on the big CAPEX spend from the government as the Budget momentum continued for the second consecutive week in a row.

Risk appetite is strong due to high liquidity, lower yields and the up move in the market in the past 8 months.

BSE midcap and small cap indices have been shedding value and underperforming in the benchmark Sensex since 2018.

Also, out of the 97 components of the BSE Midcap index, 48 have shed weight on a year-to-date basis.
However, 343 of the 675 BSE small cap Index have declined so far this year.

Going by estimates, India’s absolute GDP level in FY2022 is expected to be less than what it was in FY2020 as it is expected to shrink about 10 per cent in FY2021, but grow 6-8 per cent in FY2022.

For the week ended February 12, the S&P BSE Sensex and Nifty50 closed the week with gains of about 1.6 percent, compared to the 2.5 percent gain seen in the S&P BSE Midcap index.

Most of the economy-driven large caps have grossly underperformed Nifty50 in last one year.

Going forward, sustainability of the recent pickup in economic activity may result in strong outperformance from midcaps and small caps.

While Sensex rules at record high, BSE midcap and small cap indices are 18 per cent and 33 per cent away from their all-time highs of 18,321 points and 20,183, respectively.

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