No vertigo mid & smallcap indices make new records

Mid-cap and small-cap indices hit new highs on Wednesday extending their winning run as retail investors continued to lap them up despite growing concerns over elevated share valuations in the space.

However, the benchmark Nifty 50 lingered below the psychological resistance of 25,000 level.

Nifty's Midcap 150 index, which gained 18.32% since the election results on June 4, made an all-time high of 21,913.1 on Wednesday. It closed 0.51% higher at a new record 21,860.95.


Nifty's Smallcap 250 also made a lifetime high of 18,038.1 on Wednesday but closed 0.2% lower at 17,948. It has returned 21.6% since June 4. Nifty's Microcap index, which made a lifetime high of 24,917.45 during the trading session, ended 0.1% higher at a record close of 24,818.60. The index has grown 27.2% in this period.

Since election results day, the Nifty and Sensex have gained 14% and 13.4%, respectively.

"The mid-caps and small-caps have been outperforming the benchmarks despite expensive valuations due to the excess liquidity in the market," said Shrikant Chouhan, head of research at Kotak Securities. "Traders have preferred putting their money in these spaces due to the absence of any negative news flow, which has grown their risk appetite."

Chouhan also said that buying by flexicap and multi-cap mutual fund schemes has also led to more flows in small-caps and mid-caps, along with the expectation of rate cuts in the US, which may lead to more FII inflows, and has led to a positive sentiment around these stocks.