Scribd
Upload
63 views4 pages

Small-Caps The New Big Bets of D-Street: % Return

Small cap stocks have been outperforming large caps on the D-Street over the past year. The small cap index has risen over 23% in the last year compared to rises of 18% for the Nifty and 16% for the Sensex. However, valuations for small caps look stretched compared to large caps, with their PE ratios being much higher. While small caps still offer upside potential, an immediate correction is possible given the sharp rally. Long term investors can use any corrections to enter quality small cap stocks.

Uploaded by

Dynamic Levels
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
63 views4 pages

Small-Caps The New Big Bets of D-Street: % Return

Small cap stocks have been outperforming large caps on the D-Street over the past year. The small cap index has risen over 23% in the last year compared to rises of 18% for the Nifty and 16% for the Sensex. However, valuations for small caps look stretched compared to large caps, with their PE ratios being much higher. While small caps still offer upside potential, an immediate correction is possible given the sharp rally. Long term investors can use any corrections to enter quality small cap stocks.

Uploaded by

Dynamic Levels
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

Small-Caps the new big bets of D-Street

It began on 24th August 2016, the story of small cap stocks taking over
the D-Street and turning out to be the new big bets in the market. It was
the same fateful day when these stocks reclaimed an all time high and
ever since then they have been outperforming the Benchmark Indices
of Sensex and Nifty by a wide margin. For the third week straight, small
cap index is trading above the all time high of Rs. 6113, the one that
they made back in May 2015. On this date, they have crossed the level
of Rs. 6300.
Valuation in this line looks stretched as compared to the large cap
peers, increasing the risk level. While the PE for Nifty is placed at 24.45
and that of Sensex is at 20.84, PE of BSE Small cap Index is placed at 75.12 and that of Nifty Small Cap 100
is somewhere at 45.16. This has got the investors nervous and yet this Index is tempting them like no
other for they are still showing some space for growth. Moreover, the low interest rate environment has
made the valuations in this Index lesser deadlier. The Small Cap stocks are offering better upside and are
offering good investment opportunities. The Index offers a larger area for making choices as they have
overhauled the large cap stocks in numbers, hence offering better exposure to the consumer space.

The Yearly return Report:


The small caps on both the bourses have already doubled the investors wealth in last one year. On BSE
Sensex, the stocks like PS IT Infra, Tata Metaliks, Sudarshan Chemicals and Manapuram Finance have
been taking the market by storm for past one year. While among NSE small 100 Manapuram Finance,
GNFC, Godfrey Phillips and Balrampur chini have been stealing the limelight.

% return
30
25
20
15

% return

10
5
0
Nifty

Sensex

Nifty Small
100

BSE Small
Cap

The chart clearly shows that the small caps have been yielding greater returns for past one year in
comparison to the Benchmark Indices and that too with a massive margin. Nifty small 100 has given the
return of around 28% in one years time as against 18% as that of Nifty. One year return for Sensex is
16% which is way behind that of S&P BSE Small cap index that rose by 23%.
Some stocks might look expensive when compared with historical valuation, but there are plenty of
growth opportunities here than in large caps.

The Catch:
Every too good to be true situation has a catch. This has too. The chances of immediate correction cannot
be ruled out after such a sharp rally. But the long term investors can use it to their benefit for entering the
quality stocks. Small cap stocks are often out of the line of attention of Institutional Investors. But as they
grow bigger, they start receiving attention from them. And if the promoters dont sell, a flow from the
retail investors will be triggered who would look to sell some of their holdings, fuelling the rally further as
the investments are entered by institutions.

Handpicked from NSE:


Here is a list of top ten small cap stocks from NSE. Each of them have rallied over 100% in past one year
and are set on giving good returns and are either the top 500 picks for the quarter or the multibagger
stocks for the month.

INSTRUMENT
MANAPPURAM
GNFC
GODFREY PHILLIPS
BALRAMPUR CHINI
GHCL
MUTHOOT FINANCE
SHREE RENUKA
INDIA CEMENTS
ESCORTS
DELTA CORP

1M %
-1
6
20
-20
7
-8
-5
23
29
23

1Y %
307
173
161
132
123
123
121
120
114
104

Manapuram is leading the rally for the yea. In past month some of the stocks have turned negative but of
course that will be short lived. Last month, Escorts stayed ahead with India Cements, Delta Corp and
Godfrey Phillips following close behind.

The gloomy ones:


Mot all NSE small 100 stocks are going gaga in the rally. There are quite some bears among the bulls as
well. These 15 small cap stocks have turned negative in a years time.
SL

INSTRUMENT

EROS

INOX WIND

MARKSANS PHARMA

DEN NETWORKS

ALOK INDUSTRIES

ROLTA

KITEX

BOMBAY DYEING

JAYPEE INFRATECH

10

KAVERI SEED

11

IOB

12

ASTRAZENECA PHARMA

13

JAIPRAKASH POWER

14

IL AND FS TRANSPORTATION

15

WELSPUN CORP

1M %
-3
-14
-15
-22
0
-2
0
1
8
-5
-2
0
-15
3
-3

1Y %
-53
-52
-49
-43
-38
-35
-33
-23
-22
-21
-19
-15
-15
-14
-12

Eros, and Inox wind have turned negative over 50%, while Marksans Pharma and Den networks are in
40% negative value. These stocks have looked not hopeful in even a weeks time. So, no matter how shiny
the small caps looks, it is always better to scroll through the past records before picking up the right gem.

Not yet the End:


The rally has been going on since long but three weeks ago it has turned in to a whirlwind, blinding the
market. But the story has not yet come anywhere near its end. There are opportunities in the Auto part
sectors, building materials and pipe businesses. These stocks have done well but arent yet frothy. And
since the demand momentum is very strong from construction, irrigation and auto sector, there is still
some upside. Investors need to become more discriminatory in choosing stocks and sectors at the
ongoing valuations and probably raise some cash and wait for correction.

Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of
the research team. Users are advised to use the data for the purpose of information and rely on their own judgment while making
investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022

Disclosure
Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also engaged in Investment
Advisory Services and Portfolio Management Services. Dynamic Commodities Pvt. Ltd., associate company, is a member of MCX &
NCDEX. We declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with
whom we are registered. SEBI, Exchanges and Depositories have conducted the routine inspection and based on their
observations have issued advise letters or levied minor penalty on for certain operational deviations.
Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/
Research Analyst/ his Relative:

Do not have any financial interest / any actual/beneficial ownership in the subject company.
Do not have any other material conflict of interest at the time of publication of the research report
Have not received any compensation from the subject company in the past twelve months
Have not managed or co-managed public offering of securities for the subject company.
Have not received any compensation for brokerage services or any products / services or any compensation or other
benefits from the subject company, nor engaged in market making activity for the subject company
Have not served as an officer, director or employee of the subject company

Article Written by
Tanaya Nath

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy