Valuation concerns ebbed? 400 smallcaps give double-digit weekly returns of upto 52%

MUMBAI – Concerns over high valuations in the smallcap universe seems to have ebbed as stocks rallied in the week gone by and outperformed benchmarks by a wide margin.

As many as 400 smallcap stocks gave double-digit returns of upto 52% in the week ended April 5, data by Ace Equity showed.

Of these 400 stocks, 65 of them have given more than 20% weekly returns. Geojit Financial Services, PNB Housing Finance, Cochin Shipyard, Hindustan Construction Co, GMR Power & Infrastructure, Ujjivan Small Finance Bank, Coffee Day Enterprises, GE Power, Waaree Renewable, Oswal Greentech, OnMobile Global, Indraprastha Medical Corp are among the stocks, that gave over 20% returns last week.

Of the 400 stocks, 22 stocks also scaled 52-week highs in the last week.

The strong rally in smallcap stocks drove the BSE Smallcap index 6% higher last week. Meanwhile, benchmark S&P BSE Sensex gave just 0.8% returns.


Not only smallcap stocks, but stocks in the SME segment too, joined the party, as the BSE SME IPO index rallied 10% and gave the highest returns among all the BSE indices.

The rally in these stocks indicate the unprecedented faith of retail investors eventhough market regulator Securities and Exchanges Board of India has voiced concerns over potential price manipulations in the SME segment and the building froth in the smallcap space.

While the smallcap universe is showing no signs of fatigue, money managers are growing cautious about returns in FY25. Most money managers see returns moderating in FY25, compared to FY24.

“With the sharp outperformance of the broader markets, the valuations in the small/mid-cap segment have become quite expensive,” said Sampath Reddy, chief investment officer, Bajaj Allianz Life.

“We have been suggesting to customers in our investment communication that we prefer large-caps compared to small/mid-caps over the past few months and continue with that stance,” he added.

(Data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)

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