Broader markets have outperformed benchmark indices for some time now. The NSE Midcap 100 has risen 75 percent since July 2020 while the smallcap has more than doubled investor wealth in this time.
While the Nifty Midcap index has outperformed Nifty since July 2020, the smallcap index has outperformed the frontline index since May 2020.
Moreover, the Nifty Midcap index has given consecutive positive returns in the last 13 months (since June 2020), while this period has been 8 months for the Nifty Smallcap index (since November 2020). The midcap and smallcap indices have generated returns of 102 percent and 67 percent in the last 13 months and 8 months, respectively
In comparison, Nifty ended in the red in April 2021, 2 months ago.
This is the best such period of consecutive months of positive returns for the NSE Midcap 100. The Nifty Smallcap 100 has bettered this only once in the past, brokerage house Motilal Oswal noted in a report.
"The outperformance of midcap and smallcap indices have gone past their earlier benchmarks on multiple fronts – consecutive months of positive returns, 12-month rolling returns gap v/s the Nifty, relative valuations, and contribution to overall market capitalization," it added.
While the midcap/smallcap valuations are rich and no longer lucrative on the risk-reward metric, the gradual unlocking of the economy and improved demand backdrop still offer bottom-up opportunities. Consistent earnings delivery v/s expectations are critical for further outperformance, the report further stated.
Among stocks, 15 midcap stocks have surged over 100 percent since July 2020 with Tata Elxsi leading with 371 percent. Meanwhile, Dixon Tech, Deepak Nitrite, IndiaMART, Dalmia Bharat, Coforge and MindTree added between 150 percent and 300 percent in this period.
In the smallcap index, 22 stocks surged over 100 percent with CG Power leading with 647 percent since July 2020.
Meanwhile, in the Nifty50 index, 9 stocks more than doubled investor wealth. JSW Steel rose the most, up 254 percent while Tata Steel added 253 percent and Tata Motors 224 percent. Hindalco, Grasim, Wipro and SBI also rose over 130 percent each.
First Published: Jul 6, 2021 3:58 PM IST
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