Retail investors find solace in penny stocks as largecaps consolidate

Retail-investor dominated penny stocks seem to have regained momentum, even as the surging crude prices begin to temper the optimism over corporate earnings and reignite inflation concerns.

Many small stocks including Vodafone Idea, Jaiprakash Power Ventures, Reliance Power, Hathway Cable and Datacom, Jaiprakash Associates, Media Matrix Worldwide and SEPC Ltd have rallied anywhere between 35 percent to 90 percent over the last three months. That compares with five to seven percent gains clocked by the benchmark Nifty 50 and the broader NSE 500 index during the same period.

Interestingly, barring five stocks, all companies in the sample have yielded positive returns over the last three months, with stocks like IFCI, GVK Power & Infrastructure, Unitech and Sarveshwar Foods more than doubling during the same period. Indeed, the sample comprises only those companies with minimum market capitalisation of Rs 500 crore and having a stock price, which is less than Rs 25. Further, the aggregate market capitalisation of these 44 small stocks in the sample has surged nearly 30 percent to Rs 1.9 lakh crore over the last three months.