Reflecting the nature of a sentiment-driven rally, small-cap companies have caught the fancy of investors in the market gains of the year so far.
Nearly a quarter of BSE small-cap universe more than doubled this year, the index it self rallied 60% this year, outpacing the benchmark indices by more than two times. In 2014, while Sensex and Nifty rallied nearly 22.6%, broader BSE-100 and BSE-500 indices have added nearly 25% and 28%, respectively.
As the market confidence got a boost in the run up to the election and after the results were announced, the risk appetite of the investors also rose. Not surprisingly, smaller companies from the infrastructure, agriculture, technology, finance, metals, auto ancillary and trading space witnessed strong gains in last six months.
About 14 of the 465 BSE small-cap companies have more than doubled this year and nearly 23 of these have observed a three-fold jump, even as share price of about a tenth of BSE 500 and BSE mid-cap constituents have doubled.
Among the BSE-100 sample, which represents the most liquid large cap names, only Unitech, Bharat Forge and Ashok Leyland managed such gains in the first half of the year. As investors went for higher risk-reward options, as many as 55 companies that traded with a market price of less than R100 in 2013 have doubled in the year so far.
Similarly, about 40 small-cap companies with a market capitalisation of less than R500 crore have also seen a 100% jump in their market value. Names like Hindustan Construction Company, HCL Infosystems, Simplex Infra, Texmaco Rail and BEML have nearly trebled year-to-date.