D-Street: D-Street starts FY25 on high note, mid- and small-caps rebound

Mumbai: Indian equities kicked off the new financial year on a strong note with benchmark indices hitting all-time highs in the first trading session of FY25. Mid-caps and small-caps rebounded on Monday after a weak show in March, as investors lapped up beaten-down names in that space on hopes these stocks could repeat their historically strong performance in April.

NSE’s Nifty rose 135 points, or 0.61%, to close at 22,462 after touching an all-time high of 22,529 earlier in the day. BSE’s Sensex rose 363 points, or 0.49%, to end at 74,014 off the record high of 74,254 during the day. The record closing levels for the Sensex is 74,119 and for the Nifty is 22,493 hit on March 7.

“The April month has seasonally remained strong for Nifty, and a bounce-back in the markets was due after the corrections seen in March,” said Apurva Sheth, head of research at Samco Securities.

In the past 14 years, Nifty Midcap 100 and Smallcap 100 indices have closed higher on 11 occasions. The midcap index has posted average gains of 3.127%, and the Smallcap 100 index has returned 4.44% on average during the month, said Sheth.

“April is also the most positive month of the year for mid- and small-caps,” he said.Nifty’s Midcap 100 index gained 1.74% and Smallcap 100 Index was up 3.26% on Monday.The outlook for mid-cap stocks is better than that for small-caps, said analysts. “While there was a lot of action in the small- cap and the mid-cap space, we feel the mid-cap space is a lost safer bet as it has a higher relative strength,” said Sudeep Shah, head of technicals and derivatives research at SBI Caps.Shah said the midcap index is just 1.5% away from all-time high levels, compared to the smallcap index which is 6% away from their highs.

He expects the Nifty to go up further from these levels. “The overall outlook for it is still bullish, and Nifty has a strong base at the 22,200-22,250 levels,” he said. “Till these levels hold, we can see the current up-move in Nifty strengthening up to 22,650-22,750 the coming week.”

Nifty’s Volatility Index or VIX – a fear gauge – fell 5.84% to 12.08 at close, suggesting traders see lower risks in the market in the near term.

Sheth said the momentum for markets will continue but investors must still be selective about their investments. “We prefer large-caps over mid- and small-caps, as they may remain range bound moving ahead,” said Sheth.

Nifty’s Media, Realty, and Metal indices were the top gainers on Monday.

Elsewhere in Asia, China advanced 1.19%, Hong Kong rose 0.91%, South Korea remained flat and Taiwan dropped 0.97%.

Foreign portfolio investors net sold shares worth ₹522 crore. Domestic institutions were buyers to the tune of ₹1,208 crore.