The Sensex crossed 42,000 for the first time as it touched 42,059 in the morning trade on January 16. It took 36 sessions for the index to make the journey from 41,000 (first hit on November 26) to 42,000, but the big movers were the small & midcap stocks.
The Sensex added 1,000 points, rising 2.4 percent, but the BSE Midcap index rose 4.8 percent and the BSE Small-cap index rallied by more than 8 percent in the same period, AceEquity data shows.
The rally can be attributed to positive global cues, reforms initiated by the government to combat falling growth and expectations of reforms from the Budget that will be presented on February 1.
Small & midcaps seem to be getting the maximum attention as most of the stocks in the broader market space have been giving double-digit returns from November 26, 2019.
As many as 314 stocks in the S&P BSE Smallcap index rose 10-100%. These include Bata India, PTC India, DCB Bank, Chambal Fertilisers, Trident, Apollo Pipes, Agro Tech Food, Jaiprakash Power, and Indiabulls Integrated Services.
The global investment bank Morgan Stanley said in a report the trend could well favour quality midcaps in the 2020.
“We opine that growth is likely improving and that dislocations in price/valuation across sectors, style baskets and market cap cohorts will likely reverse in 2020 since these gaps were created by sluggish growth in the first place,” the report said.
Morgan Stanley said it was backing three themes for 2020: a) domestic cyclical outperform defensives, b) value and growth stocks beat quality stocks, and c) mid-caps lead the largecaps.
In the BSE Midcap index, there are 24 stocks that could give 10-40 percent since November 26 that include Bayer CropScience, Berger Paints, Oberoi Realty, L&T Infotech, Godrej Agrovet, Tata Global Beverages, and ICICI Securities.
In terms of Sensex gainers–Tata Steel has rallied over 18 percent since November 26, followed by Infosys that rose 11 percent.
Eleven stocks gave negative returns. Among them are Sun Pharma, Axis Bank, Bajaj Auto, L&T, ITC, and IndusInd Bank.
Investor wealth soared by over Rs 6 lakh crore in a buoyant equity market. The market capitalisation of BSE-listed firms soared from Rs 153.70 lakh crore on November 26 to Rs 159.74 lakh crore on January 15, 2020.
Where is the market headed?
The Sensex rallied by over 14 percent, while the Nifty surged 2 percent in 2019, and going by experts’ initial estimates, 2020 could turn out to be a year in which benchmark indices again deliver double-digit returns.
Experts say the Sensex could hover in the 43,000-44,000 range, while the Nifty, which made a high of 12,389 on January 16, could head towards 14,000.
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