The rally in midcap and smallcap shares is showing no signs of slowing down. The Nifty Midcap 100 index gained a percent to hit an all-time high, riding past 40,000-mark on Tuesday led by a strong bullish momentum in midcap stocks.
Among midcap index constituents, Devyani International jumped over 8, Trident and IRFC rallied over 7% each, Bank of India and Zee Entertainment shares gained over 4% each, while Petronet LNG, Jubilant FoodWorks, Tube Investments of India, Max Healthcare Institute, Adani Power, Aurobindo Pharma, OIL India, among others were up anywhere between 2% to 3% each.
The Nifty Midcap 100 index has surged more than 27% this year so far, while the Nifty Smallcap 100 index has jumped over 30%. Both the indices have significantly outperformed the benchmark Nifty, which is up by 8% during the same period.
Strong earnings growth, improving performance, foreign fund inflows and robust macroeconomic situation have been key factors behind the rally in midcap stocks.
Over the last nine months, the Indian stock market has witnessed broad-basing. From being entirely dominated by a narrow basket of quality large cap stocks of select sectors, markets have broadened with the participation of other sectors too during the last eight months, as per a report by brokerage firm Motilal Oswal Financial Services.
Midcap and smallcap stocks saw a jump in their market cap contributions since the previous Nifty peak of December 2022. The rally in Nifty Midcap 100 constituents was skewed more towards the top 15 companies in CY23YTD, the report said.
Midcap stocks in hotels and education sectors have seen a decent performance on the back of strong fundamentals.
“The rally in midcap hotel stocks is likely to continue as hotel occupancy will pick up with events like G20 and ICC ODI Cricket World Cup going ahead. The demand supply mismatch in the sector will continue,” said Jinesh Joshi, Research Analyst, Prabhudas Lilladher Pvt Ltd.
Joshi is also bullish on the education sector and expects stocks like S Chand & Company and Navneet Education. He sees the stocks are ripe enough for a ride over the next 2-3 years. He believes the New Education Policy will lead growth in the publication business and drive volume delta and pricing benefits for these companies.
Meanwhile, he is also positive on the multiplex space amid a slew of upcoming new movie releases which are expected to drive further growth in the sector.
Among midcap stocks to watch out for, Joshi expects Chalet Hotels, S Chand and Company, Navneet Education, Nazara Technologies and Safari Industries to see decent growth going ahead.
Meanwhile, Gaurang Shah, Senior VP, Geojit Financial is positive on midcap IT, FMCG, banking, auto ancillaries and hospitality sectors.
He said investors sitting on decent gains in midcap stocks can book profits. To list a few midcap stocks, he said CIE Automotive India, HEG and Tanla Platforms.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
Download The Mint News App to get Daily Market Updates.
Updated: 05 Sep 2023, 12:56 PM IST