About 80% PMS schemes outperformed Nifty in August, rise up to 25% MoM

The Indian market continued to rise for the third consecutive month in August backed by better-than-expected corporate earnings, strong FII flow. Hopes of a quick economic turnaround, as well as positive developments on the COVID-19 vaccine front, also aided the sentiment.

For the month, headline index Nifty and Sensex rose 2.84 percent and 2.72 percent respectively, though the rebound rally since March seemed to be cooling off as monthly gains contracted compared to June and July where the benchmark posted over 7 percent returns.

The broader markets continued to outperform the frontliners during August with BSE Midcap and Smallcap indices rising 6.56 percent and 10 percent, respectively.

Sectorally, barring FMCG and IT, all other sectors generated positive returns in August led by Metal which rose 12.88 percent, Banks (9.65 percent) , Capital Goods (7.9 percent) and Auto (up 7 percent).

The bullish momentum helped 78 percent of Portfolio Management Schemes (PMSes) log benchmark-beating returns during the month.

As many as 144 PMSes outperformed Nifty during August, data collated by PMS AIF World, a research-backed financial services firm, showed. About 31 schemes managed to generate double-digit returns month-on-month.

Of the 183 schemes PMS AIF World looked at, only two generated negative returns during the month, while six schemes remained flat.

Negen Capital's Small Cap Emerging topped the list with a whopping 25.13 percent return during August. Other top performing schemes included Centrum PMS' Microcap (18.7 percent), Marcellus' Little Champs (18 percent) and Ambit's Emerging Giants ( 16.8 percent).

Seven out of the 10 best performing PMSes were from the smallcap space. Meanwhile, Centrum's Multibagger, Deep Value and Good To Great schemes, Phillip Capital's Emerging India Portfolio were the best midcap focused schemes, rising over 10 percent each.

Market analysts are of the view that the mid and smallcaps may continue to rise, even as volatility will persist and occasional consolidation will occur due to macroeconomic and geopolitical factors.

"Further re-opening of the economy along with ample liquidity scenario is adding confidence to invest in mid and smallcaps. A large section of largecaps are trading at premium valuations which also increases the attractiveness of mid and smallcaps, as it looks to sustain this outperformance in the short to medium-term," said Vinod Nair, Head of Research at Geojit Financial Services.

The BSE Midcap index is a shade away from turning positive for 2020 while the Smallcap index is up over 5 percent on a year-to-date basis.

"Coronavirus still poses a significant threat but recent visibility of the COVID vaccine provides confidence to the market. We expect the high quality of beaten-down stocks would out-perform the largecap stocks," said Amarjeet Maurya, AVP - Mid Caps, Angel Broking.

Meanwhile, not a single largecap focused scheme made it to the top 10 in August.

Ace Pro Advisors' Largecap Strategy, Emkay’s 12, Pelican’s PE Fund, Concept Investwell’s Legend, Right Horizon’s India Business Leader were some of the best-performing PMSes from the largecap space, rising 2-6 percent.