India's small cap stocks have gained in nine out of last ten Decembers

The month of December has brought positive returns for the Nifty Smallcap index in nine out of the last 10 December periods.  Repeating the trend, the Sensex and Nifty 50 are now trading close to their all-time high, even while the index significantly underperformed the benchmark indices so far in 2022, declining over 12 percent.

This year's 12 percent decline comes on the back of nearly 60 percent gains in 2021 and 22 percent gains in 2020.

December being good for the Smallcap index has been corroborated by Laurence Balanco of CLSA, who said that the index is poised for a breakout in the near term.

Among the top 10 gainers on the Smallcap index this year, two stocks-- Bharat Dynamics and Deepak Fertilisers-- have doubled in value while others among the top 10 gainers have shot up between 50-90 percent.

Among the top laggards, Metropolis stands out among the known names, declining nearly 60 percent this year. Others include IT names like Mastek, Birlasoft and Quess Corp.

"After three weeks of hesitation, the Nifty looks primed for a breakout with momentum confirmation (daily RSI > 70 would provide momentum confirmation). Such a move would be a bullish event and signal a resumption of the markets long-term uptrend & would provide an initial upside target of 20,185. In addition we see similar potential in the Nifty Small cap Index," Balanco wrote in a note.