Small-cap, mid-cap stocks outshine blue-chips

The mid-cap and small-cap indices have outperformed their large-cap peers so far in 2012.


The small-cap index of the BSE (Bombay Stock Exchange) has given a return of 28 per cent since the beginning of 2012, the mid-cap index is closely following with 27.5 per cent. In comparison, the gain in the blue-chip barometer index Sensex has been much lower at about 18 per cent.


Most stocks in the mid and small-cap segments were beaten down heavily during the last year, as their financial performance were impacted by rising interest rates, analysts said.


The mid-cap and small-cap indices plunged by 34 per cent and 42 per cent, respectively, during 2011. However, the Sensex fared slightly better with a slump of about 25 per cent during the same period.


"During times of uncertainty one witnesses greater losses in mid and small cap counters. But when markets rally, these stocks move ahead of the frontline stocks," Religare Securities EVP & head (retail research) Rajesh Jain said.


Macroeconomic headwinds on the global and domestic front and concerns over policy reforms and currency fluctuation were some of the major factors that resulted in volatile and uncertain market conditions through 2011.
     

Shares of companies like HDIL, Lanco Infra and Orbit Corp have zoomed by 127 per cent, 131 per cent and 130 per cent, respectively so far in the current year.


Marketmen said that retail investors should utilise this opportunity of a bullish market to book profit in companies with weaker fundamentals.
 

The mid-cap indices track the performance of companies with market capitalisations that are a fifth of the blue-chip firms, while the small-cap firms are of almost one-tenth of the size of large-caps.

Tags: HDIL, Lanco Infra, markets, mid cap, Orbit Corp, small cap