A day after Nifty50 climbed Mount 16K, the S&P BSE Sensex created history surpassing the crucial psychological level of 54000 in intraday trade to hit a fresh record high of 54440.
It took the S&P BSE Sensex about 30 sessions to rise from 53K to 54K. The index hit 53000 in intraday trade on June 22 for the first time.
"Nifty made a record high and crossed 16k levels and today Sensex touched 54k for the first time, signifying the continuation of the bull run. Market is welcoming the sequential recovery of key high frequency indicators like manufacturing PMI, the GST collection and the Google mobility data, all are trending higher on a month-on-month basis," said Naveen Kulkarni, Chief Investment Officer, Axis Securities
The S&P BSE Sensex rallied nearly 2 percent since June 22, but the S&P BSE Midcap index rose nearly 4 percent while the S&P BSE Smallcap index recorded gains of over 8 percent.
Data from AceEquity showed that two stocks – Brightcom Group, and Steel Strips Wheels more than doubled investors’ wealth while 20 stocks rose 50-100 percent since June 22.
Stocks that rallied more than 50% since June 22 include names like Welspun India, Titagarh Wagons, IIFL Securities, Angel Broking, Dolat Investment, Indo Count Industries, Tejas Networks and Ajmera Realty among others.
Small & midcaps have outperformed by a wide margin so far in 2021, and the momentum only increased in the last couple of months. But, experts are now advising caution and recommend investors to be stock-specific.
The long-term story still remains intact but in the near term there could be some consolidation but that would be an opportunity to buy quality stocks.
“We can see continuous momentum in the small and midcap segment. Currently, we can see that the companies in this segment have shifted to a more growth-oriented and sustainable business approach which has helped in bringing the traction in this sector,” Mohit Nigam, Head, PMS - Hem Securities, said.
“Technical indicators also suggest the uptrend in small & midcap space but in the near term, it may witness minor correction or consolation as we can see some profit booking in the particular segment,” he said.
Nigam further added that investors need to be cautious in this segment as these stocks have great potential of appreciation in their prices, which comes with significant risk.
Investors should look for strong management, financial stability (strong revenue and profit), should invest in sector which they understand, and see vision-ability with proper selection and allocation be the key in this particular segment.
What is leading the rally?
Analysts attribute the rally in small & midcaps amid signs of economic recovery due to unlocking, debt reduction done by various companies, strong management commentary in June quarter, as well as higher growth potential.
“Key triggers like unlocking of the economy, improvement in covid situation, govt plans to expand vaccination pace, optimism over corporate earnings and positive macroeconomic factors have contributed towards the outperformance of the market,” Ankit Pareek, Research Analyst at Choice Broking, said.
“In the near term, we remain cautious over the rich valuation of the broader market and advise investors to adopt a bottom-up approach while picking stocks,” he said.
Pareek suggests that fresh investment can be made in a fundamentally strong stock for the mid to long term investment horizon. Sectorally, our top picks are IT, Infrastructure, Pharma, Telecom and Agriculture sector.
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