Union Budget 2011: Mid-cap stocks underperform blue chips
Most of the top mid-cap performers gave up major part of their initial gains with the market declining sharply in the second half.
By ET Bureau |
MUMBAI: Select mid-cap shares in sectors like infrastructure, fertiliser, realty, banks and financial services rose on the back of sector-specific sops offered in the 2011-12 Budget. However, the excitement proved short-lived as macro-economic concerns returned to haunt the market post budget. Most of the top mid-cap performers gave up major part of their initial gains with the market declining sharply in the second half. The BSE Mid-cap index under-performed the BSE benchmark index Sensex throughout the session as investors opted to book profit at higher levels due to concerns over low liquidity and fears of adverse impact on rising inflation and interest rates on earnings outlook. The index was up 0.3% at 6,373 while the Sensex ended 0.7% higher at 17,823 on Monday.
According to stock brokers, the budget lacks any incentive for investors to resume buying as macro-economic concerns continue to weigh on the sentiment. "There was nothing for the markets to cheer about in the budget. Investors continue to remain cautious on broader concerns like high inflation and its impact on the economy," said Satish Pasari, head-equity, Sunidhi Securities. It will take another three to six months for investors to start buying in mid-cap stocks.
Kislay Kanth, head of research, MAPE Securities feels most of the reforms are outside the budget. This year’s budget mainly highlighted strength of the economy and focused on the priority areas.
The list of the top mid-cap gainers includes Anant Raj Inds, United Phosphorus, IVR Prime Urban Developers, P&G Hygiene, Cholamandalam Investments, Edelweiss Capital, Bajaj Finance and Indiabulls Finance, among the few notable examples. Infrastructure shares were in demand as the FM has proposed a hike in foreign investment limit in infrastructure bonds to $ 25 billion and also proposed tax-free bonds of Rs 30,000 crore to boost infrastructure.
The gain in realty companies is attributed to the government’s proposal to extend 1% interest subvention on home loans up to Rs 15 lakh, in the 2011-12 Budget. Among pharma mid-cap companies, P&G Hygiene was the top gainer as it is expected to benefit from the reduction in excise duty on sanitary napkins and diapers from 10% to 1% in the Budget 2011-12.
According to stock brokers, the budget lacks any incentive for investors to resume buying as macro-economic concerns continue to weigh on the sentiment. "There was nothing for the markets to cheer about in the budget. Investors continue to remain cautious on broader concerns like high inflation and its impact on the economy," said Satish Pasari, head-equity, Sunidhi Securities. It will take another three to six months for investors to start buying in mid-cap stocks.
Kislay Kanth, head of research, MAPE Securities feels most of the reforms are outside the budget. This year’s budget mainly highlighted strength of the economy and focused on the priority areas.
The list of the top mid-cap gainers includes Anant Raj Inds, United Phosphorus, IVR Prime Urban Developers, P&G Hygiene, Cholamandalam Investments, Edelweiss Capital, Bajaj Finance and Indiabulls Finance, among the few notable examples. Infrastructure shares were in demand as the FM has proposed a hike in foreign investment limit in infrastructure bonds to $ 25 billion and also proposed tax-free bonds of Rs 30,000 crore to boost infrastructure.
The gain in realty companies is attributed to the government’s proposal to extend 1% interest subvention on home loans up to Rs 15 lakh, in the 2011-12 Budget. Among pharma mid-cap companies, P&G Hygiene was the top gainer as it is expected to benefit from the reduction in excise duty on sanitary napkins and diapers from 10% to 1% in the Budget 2011-12.
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