Small & Midcaps Shine: Over 170 stocks in the BSE 500 rise 10-40% in just one week

Small & Midcaps Shine: Over 170 stocks in the BSE 500 rise 10-40% in just one week

The bulls were under de-street control as benchmark indices rallied over 1 percent each during the week ending Aug. 7, but the real action was seen in the small & midcap space.

The S&P BSE Small-Cap Index rallied nearly 5 percent, while the S&P BSE Mid Cap Index ended the week ended August 7 with gains of over 3 percent.

174 stocks in the BSE 500 index rose 10-40 percent in just 5 trading sessions. These include Jyothi Labs, Jaiprakash Associates, Alok Industries, Subex, Birlasoft, Jindal Poly, Uflex, Kaplin Point, Aarti Drugs, and Vishnu Chemicals.

Note:

We have collated a list of top 50 stocks out of 174 from the BSE500 that have rallied 10-40% in the last 5 sessions:

BSE500 7 Aug

Keeping track of positive global forecasts, the Indian market has crossed critical resistance levels. However, the rise in COVID infection was reversed, but hopes of a rate cut from the Reserve Bank of India helped sentiment.

Most stocks are from small & midcap space. Experts suggest that smart money is chasing growth in a wider market space due to greater performance and higher liquidity.

“Undervaluation and flush of money are prominent reasons why we are seeing a rally in the broader markets. Mid and small-caps are catching up with large caps and investors are looking for stocks which have underperformed as they are reluctant to chase stocks at such steep valuations,” Sacchitanand Uttekar – DVP – Technical (Equity), Tradebulls Securities said.

“Also, the recent upward revisions in the circuit filter changes seems to have added that extra pedigree for most of the quality midcaps. We are yet to see any recovery in the economy after going through this pandemic so clearly investors are not eyeing any growth when buying small and mid-cap stocks. It’s just rising tide backed by liquidity that is lifting all boats in this scenario,” he said.

Where is Nifty50 headed?

The Nifty 50 closed with gains of over 1% above the 11,200 levels. Broader markets outperformed on expected lines as Nifty mid-cap and small-cap indices gained 4 percent and 5 percent, respectively.

The Nifty’s weekly price action has resulted in a low-low bullish candle, which breathed a sigh of relief after a 19 percent rally in the previous seven weeks.

Experts expect to use it to buy any dipping from here. On the upside, the Nifty 50’s next key target is set at 11,400, with 10850 acting as support.

“We reiterate our stance of outperformance in mid-cap and small-cap space. While Nifty undergoes a healthy consolidation in the broad range of 10900-11400. Such consolidation will make a larger price structure more robust as indices will re-establish a higher base. This will act as a launchpad for next major up move,” Dharmesh Shah, Head – Technical, ICICI direct said.
“We believe ongoing temporary breather after the past seven weeks 19% (9544-11340) rally will help weekly stochastic. To cool off from overbought trajectory which will count as added positive in technical terms,” he said.

Shah said dipping anything from here should not be considered negative. Instead of focusing on mid-cap and small-caps and investing in quality stocks as a growing buying opportunity.

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