250 small-cap December blockbusters see double-digit gains due to crazy rally
In November, when the Nifty 50 returned more than 5%, 334 small-cap stocks posted double-digit returns.
Nonetheless, the small-cap sector came to the rescue of the benchmark in 2023, with at least 238 companies with a market capitalization of over Rs 1,000 crore delivering multibagger returns of up to 2,961%.
In December, Nifty 50 and Sensex rose around 8%, recording their best monthly returns in 18 months and their best returns in 2023 as well. Meanwhile, the BSE Smallcap index returned 6% this month, slightly underperforming the benchmark after a few months. Excellent performance.
double-digit rise
About 40 of the 250 stocks also hit 52-week highs during the month, according to data from Ace Equity.
Several stocks from the metals and mining sector made it into the 250 stocks list, with Sandur manganese and iron ore stock topping the list, posting an 88% return in December and hitting a new 52-week high. Shares of Jindal Stainless, Shyam Metalics, National Aluminum Co, Hindustan Copper and Gallantt Ispat rose 14-86 per cent in December.
Intellect Design, Angel One, Tata Coffee, Engineers India, Jubilant Pharmova, National Fertilizers, GMR Power, CESC, HUDCO and Inox Wind were other major gainers in the small cap segment, rising over 13-78 per cent.
Stocks in the utilities sector had the biggest gains in December, with 16 stocks posting double-digit returns. Topping the list was Adani Green Energy, which rose over 55 per cent after news emerged that its promoters had invested Rs 9,350 crore equity stake in the company.
Apart from Adani Green, two other group companies – Adani Energy Solutions and Adani Power – added gains of 20% and 22% respectively.
What should investors do?
Small-cap stocks have performed well for investors in 2023, but most experts have warned that valuations will become expensive after the strong run.
Therefore, some money managers believe that it will be difficult to increase returns in the small-cap sector at present.
Over the long term, investing in selective quality small and mid-cap stocks belonging to emerging sectors or sectors of the economy is always the best way to generate alpha, says Madanagopal Ramu, fund manager and head equity at Sundaram Alternate Assets.
Ramu is of the view that the market is overestimating the earnings growth momentum of companies in the small and mid-cap sector, reflected in the 2023 rally.
(Data input by Ritesh Presswala)
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(Disclaimer: Recommendations, suggestions, views and opinions provided by experts are their own and do not represent the views of The Economic Times.)
