Up to 53% gains in 3 days! Smallcap stocks are back in vogue and how!

NEW DELHI: As buying returned to Dalal Street amid positive global cues and FII support, investors in smallcap stocks were among the biggest gainers in the three-day trading week. Up nearly 3%, the BSE Smallcap index outperformed both Sensex and midcap index this week.

Dhani Services was the top gainer in the smallcap pack as it ended 53.3% higher during the week. Nandan Denim gained 47% while Black Rose Industries and Rama Phosphates stocks rallied around 33% each. Vijay Kedia-owned stock Atul Auto ended 30% higher.

Other top smallcap gainers included 3I Infotech, TARC, Fermenta Biotech, TTK Healthcare and Gulshan Polyols.



Within the BSE500 pack, Brightcom Group stock was the top gainer as it delivered a smart return of 27% in just 3 days. The market was shut for two days in the week for holidays.

As FIIs started covering their short positions in index futures and turned net buyers in the cash market, Sensex ended 1.43% higher during the week.

After rallying non-stop for the last five trading sessions, Sensex is up around 2,200 points and Dalal Street investors richer by over Rs 10.43 lakh crore as the total market capitalisation of BSE-listed firms have surged to Rs 262.37 lakh crore.

On Friday, bulls got another shot in the arm after RBI chose to keep the repo rate unchanged at 6.5%.

"Equity markets had already started consolidating but now since the interest rates are also near the peak cycle, it is an ideal launching pad of a new bull market locally and globally," said Umesh Kumar Mehta, CIO of SAMCO MF.

With the equity market having given no returns for the last one and a half years, investors are finding the valuations much more palatable.

"A lot of froth from the broader market is out and the next six months will give us a great opportunity to start increasing the equity allocation," said Pankaj Tibrewal of Kotak Mutual Fund.

In the March quarter earnings season, which begins next week, Motilal Oswal expects Nifty earnings to likely grow 14% YoY.

"We have maintained our FY23 Nifty EPS at Rs 812 but cut our FY24/FY25 EPS estimates by 1.5%/2.2% to Rs 978/1,119. We now forecast the Nifty EPS to grow 12% in FY23. Financials alone are likely to account for 82% of the incremental FY23E earnings growth for Nifty," Motilal said.

(With data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)