Relentless rally to continue for small- and mid-cap stocks
Published On: Monday, August 2, 2021 | By: Team KnowMyStock
Presently the relentless rally in small- and mid-cap stocks continues as large-caps show signs of fatigue. In July, the Nifty Smallcap 100 rose 8.1 percent, extending its year-to-date (YTD) gains to 48.5 percent, while the Nifty Midcap 100 added 3.1 percent, taking its YTD rise to 33.5 percent. On the other hand, the Nifty50 remained unchanged for the month, with YTD gains of 12.7 percent. Not only are the small- and mid-cap indices off to their best start to a calendar year since 2014 but their outperformance over large-caps is at record levels. The Nifty Midcap 100 index has gained for 14 straight months, while the Smallcap 100 index has given positive returns for 13 of the past 14 months.
“Retail investors are pouring money into this space. Many are raising their bets, given the continued gains. I don't see any big crash over the next three months but one has to be cautious. FPIs are sitting on a phenomenal profit. There could be some profit-taking towards the year-end,” said a analyst.
Market observers say most stocks in the top 500 universe are fully priced; investors are scouting for buying opportunities in the broader market space.
“As more investors come to the market, everyone starts looking for the next big story. The next big story can only be found in small or mid-caps. Most large-caps are well-tracked and followed by investors. Mid- and small-caps are under-researched. So, the discovery happens, and whenever the discovery happens in a particular sector or stock, it tends to outperform,” said an market analyst.
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