Mid-, Smallcaps outperform in first half of 2021

While participation of retail investors will benefit the Indian equity markets in the short to medium-term, as accommodative fiscal and monetary policies are expected to continue amid lingering pandemic concerns, the sustenance of their trading activity will depend on their ability to maintain profits and trends in global markets.

In H1-CY20, the Smallcap and Midcap index had declined 9.6 per cent and 12.8 per cent, respectively. However, in H2CY20, the picture was completely different as these indices rallied 46 per cent and 37 per cent, respectively and more than made up for the losses in the first half of the calendar year.

Experts attributes this rally in the broader market to a progressive global market supported by easy money policy which boosted the value of equity assets and pushed the economy. "Some sectors gained from the pandemic either due to high demand in products and services based on technology, pharma and consumption or rise in prices due to shortage of supply," they say.

Among sectors, the metal index recorded robust performance with S&P BSE Metal and Nifty Metal indexes gaining 63 per cent in H1CY21. Nifty PSU Bank index surged 47 per cent on hopes of divestment surrounding state-owned banks and asset quality improvement. Power, infrastructure, information technology (IT) and capital goods indexes, too, fared better as compared to benchmark indices. Pharmaceuticals, telecom, private banks and fast moving consumer goods (FMCG) companies, however, were the laggards in H1CY21.

"Going ahead, we expect markets to consolidate in a range and see Nifty in the range of 16,500-17,000 by the end of 2021. However, we expect better performance from banks, auto, consumer discretionary and PSU stocks," say some market strategists.

Total 80 stocks from the S&P BSE Allcap index have seen their market values appreciate over 100 per cent in the past six months. The index, which accounts for 96 per cent market capitalisation of BSE listed companies, including Sensex, midcap and smallcap companies. Other 185 stocks, of total 867 stocks from the index, have rallied between 50 percent and 99 percent, and 87 gained in the range of 40 per cent to 49 per cent during this period.