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After weak 2022, can smallcap stocks fare well in 2023?

After weak 2022, can smallcap stocks fare well in 2023?

Since 2005, the Nifty Smallcap100 has only had five instances of negative returns. With just one exception, the index produced a return of more than 20 per cent the following year

For the year 2022, the Nifty Smallcap 100 index fell 13 per cent against a 4 per cent rise in the Nifty50 For the year 2022, the Nifty Smallcap 100 index fell 13 per cent against a 4 per cent rise in the Nifty50

Smallcap indices largely failed to match largecap barometer Nifty50 in 2022. But 2023 could be different. Valuations of smallcap indices still look a bit high when compared with historical valuations, but analysts see them recovering in 2023. That, based on historical return trends.

Since 2005, the Nifty Smallcap100 has only had five instances of negative returns. With the exception of one case in 2019, the index produced a return of more than 20 per cent the following year, said Sunil Nyati, Managing Director at Swastika Investmart.

For the year 2022, the Nifty Smallcap 100 index fell 13 per cent against a 4 per cent rise in the Nifty50

Vinod Nair of Geojit Financial Services noted that Nifty Smallcap100 is trading at a 1-year forward P/E of 16.5 times, moderated well from a high of 24 times and, thus looks attractive.

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Published on: Jan 02, 2023, 8:54 AM IST
Posted by: Priya Raghuvanshi, Jan 02, 2023, 8:50 AM IST