BSE Midcap, Smallcap slip up to 10% YTD; but these stocks have rallied over 100%

A combination of factors including sustained outflow by foreign institutional investors, rising inflation and conflict between Russia and Ukraine have taken a toll on the domestic equity market, dragging the broader indices BSE Midcap and Smallcap down up to 10 per cent on a year-to-date (YTD) basis till February 25. The benchmark BSE Sensex has also lost 4 per cent during the same period.

Data available with Ace Equity showed that at least 53 second-run stocks have rallied more than 100 per cent YTD. With a rally of 558 per cent, Sejal Glass emerged as the top gainer in the list. Shares of the company have jumped to Rs 153.10 on February 25 from Rs 23.26 on December 31. It was followed by Kaiser Corporation (up 549 per cent), Tine Agro (up 547 per cent), Gujarat Credit Corporation (up 523 per cent), BLS Infotech (up 487 per cent) and Khoobsurat (up 442 per cent).

Commenting on the broader market, Shankar Sharma, vice-chairman and joint managing director at First Global in an earlier interaction with Business Today said, “I am optimistic about small-cap segment in India because I see so many companies doing phenomenally well where valuations are reasonable. I do believe that is the area to focus on this year as well instead of looking at the big cap stocks. I remain positive about technology and chemicals stocks in India.”

Players like KIFS Financial Services, Maitri Enterprises, ARC Finance, Shanti Educational Initiatives, Variman Global Enterprises, SEL Manufacturing Company, Magellanic Cloud, Katare Spinning Mills, Kiran Syntex, IEL, MPS Infotecnics, White Organic Retail, Diligent Industries and Vegetable Products have also gained between 200 per cent and 400 per cent since January 1.

On the other hand, Gaurav Dua, head-capital market strategy, Sharekhan by BNP Paribas advised investors to focus on fundamentals and invest in the right quality of business rather than chase momentum stocks in the broader markets where the damage is extensive and recovery can take a lot more time.

“We prefer domestic cyclical plays,” Dua said, adding he likes players like Oberoi Realty, Radico Khaitan, Jubilant Foodworks, Polycab, Persistent Systems, Healthcare Global Enterprise and Globus Spirits in the broader space.

AK Spintex, Arunjyoti Bio Ventures, Hemang Resources, Elegant Floriculture & Agrotech (India), BCL Enterprises, MFS Intercorp, Alliance Integrated Metaliks, MRC EXIM, Madhusudan Securities, Swiss Military Consumer Goods stood among other stocks that have rallied more than 150 per cent in the past two months.

For stock-specific investors, brokerage Angel Broking suggested stocks like Oberoi Realty (target price: Rs 1,250), Devyani International (TP: Rs 219), Sobha (TP: Rs 1,050), Amber Enterprises (TP: Rs 4,150) and Sona BLW (TP: Rs 843) and AU Small Finance (TP: Rs 1,520).

Among the major losers, Anand Rayons, Raghuvir Synthetics, TTI Enterprise, Asit C Mehta Financial Services, Superior Finlease, Indowind Energy, Sanathnagar Enterprises, Simplex Papers, Supremex Shine Steels and Automotive Stampings and Assemblies have eroded over 60 per cent of investors’ wealth in 2022 so far.