The BSE mid-cap and small-cap indices quoting at 6,150 and 5,935 levels respectively, are trading over 30% below their historic highs
Even as the S&P BSE Sensex hit an all-time high after a gap of five years and 10 months, the mid-cap and small-cap indices are still far away from their lifetime highs they had scaled on January 10, 2008.
The BSE mid-cap and small-cap indices quoting at 6,150 and 5,935 levels respectively, are trading over 30% below their historic highs. The mid-cap index had touched a lifetime peak of 10,245.81 and the small cap touched an all-time high of 14,239.24 in January, 2008.
Data suggests that the BSE small-cap and BSE mid-cap indices have underperformed the Sensex in the recent past. So far in the current calendar year 2013, the Sensex has gained 9.59%, while the BSE Small-cap index has lost 19.6%. The BSE Mid-cap index, in the same period, is down by 13.50%.
“The liquidity is tighter now as compared to what it was in 2008 and the cost of funds is also higher. So, working capital requirement for most mid-cap companies has risen, which has depressed return on equity (RoE). With a depressed RoE, one can’t have high earnings. Besides, a lot of mid-caps are vendors to the large companies and are not exporters themselves. It is the export-driven pack that has propelled the Sensex to a new high now,” said Ravi Shenoy, assistant vice president (mid-cap research), Motilal Oswal Securities.
The mid-cap and small-cap indices track the performance of companies with relatively smaller market capitalisation. There are total 654 stocks in the BSE mid-cap and small-cap index, which accounts nearly 18% of total BSE market capitalisation.
Among the sector classification five BSE sectoral indices – IT, Bankex, healthcare, fast moving consumer goods (FMCG) and auto have touched new all-time highs in the recent past.
Outside of these five sectors, the remaining six sectors have a lot more work to do before getting back to new records. Power, capital goods, metal, realty and oil and gas all hit their record highs in 2007 and 2008; and all five sectors need to rally between 60% and 900% before they see new highs. Consumer durable index trading at 6,251, a 24% lower from its record high of 8,221 touched on December last year.
The realty sector hit its all-time high in 2008 at a level of 13,848.09. With the sector currently trading at 1,365.46, it needs to rally nearly 900% before reaching its record high. Meanwhile, out of 527 actively traded stocks as many as 210 stocks available at half of their market price as on January 10, 2008.
Aban Offshore, Suzlon Energy, Educomp Solutions, Unitech, Jai Corp, HDIL, IVRCL, Punj Lloyd, HCL Infosystems, BEML and Lanco Infratech are down sharply between 90-98% from their January 2008 levels.
However, around 200 stocks that recorded gain over the period, the market price of 98 stocks more-than-double during the period.
TTK Prestige, Eicher Motors, Page Industries, Hawkins Cookers, Kajaria Ceramics, Cera Sanitaryware, Ajanta Pharma, Relaxo Footwear and Symphony have seen price appreciation over six-fold.
According to latest shareholding pattern data, individual investors holding in BSE Mid-Cap was 10.4%, while it was 17.35% in BSE Small-Cap. However, they are holding an average 6.6% stake in BSE-100 companies.
“With the markets touching new high, the momentum can bring back retail investors back to the markets, which can see mid-caps also move up. We like GRUH Finance, Bajaj Corp, Supreme Industries, United Phosphorous, Unichem Labs, Swaraj Engines, WABCO India and Berger Paints in the mid-cap space,” he adds.
The BSE mid-cap and small-cap indices quoting at 6,150 and 5,935 levels respectively, are trading over 30% below their historic highs. The mid-cap index had touched a lifetime peak of 10,245.81 and the small cap touched an all-time high of 14,239.24 in January, 2008.
Data suggests that the BSE small-cap and BSE mid-cap indices have underperformed the Sensex in the recent past. So far in the current calendar year 2013, the Sensex has gained 9.59%, while the BSE Small-cap index has lost 19.6%. The BSE Mid-cap index, in the same period, is down by 13.50%.
“The liquidity is tighter now as compared to what it was in 2008 and the cost of funds is also higher. So, working capital requirement for most mid-cap companies has risen, which has depressed return on equity (RoE). With a depressed RoE, one can’t have high earnings. Besides, a lot of mid-caps are vendors to the large companies and are not exporters themselves. It is the export-driven pack that has propelled the Sensex to a new high now,” said Ravi Shenoy, assistant vice president (mid-cap research), Motilal Oswal Securities.
The mid-cap and small-cap indices track the performance of companies with relatively smaller market capitalisation. There are total 654 stocks in the BSE mid-cap and small-cap index, which accounts nearly 18% of total BSE market capitalisation.
Among the sector classification five BSE sectoral indices – IT, Bankex, healthcare, fast moving consumer goods (FMCG) and auto have touched new all-time highs in the recent past.
Outside of these five sectors, the remaining six sectors have a lot more work to do before getting back to new records. Power, capital goods, metal, realty and oil and gas all hit their record highs in 2007 and 2008; and all five sectors need to rally between 60% and 900% before they see new highs. Consumer durable index trading at 6,251, a 24% lower from its record high of 8,221 touched on December last year.
The realty sector hit its all-time high in 2008 at a level of 13,848.09. With the sector currently trading at 1,365.46, it needs to rally nearly 900% before reaching its record high. Meanwhile, out of 527 actively traded stocks as many as 210 stocks available at half of their market price as on January 10, 2008.
Aban Offshore, Suzlon Energy, Educomp Solutions, Unitech, Jai Corp, HDIL, IVRCL, Punj Lloyd, HCL Infosystems, BEML and Lanco Infratech are down sharply between 90-98% from their January 2008 levels.
However, around 200 stocks that recorded gain over the period, the market price of 98 stocks more-than-double during the period.
TTK Prestige, Eicher Motors, Page Industries, Hawkins Cookers, Kajaria Ceramics, Cera Sanitaryware, Ajanta Pharma, Relaxo Footwear and Symphony have seen price appreciation over six-fold.
According to latest shareholding pattern data, individual investors holding in BSE Mid-Cap was 10.4%, while it was 17.35% in BSE Small-Cap. However, they are holding an average 6.6% stake in BSE-100 companies.
“With the markets touching new high, the momentum can bring back retail investors back to the markets, which can see mid-caps also move up. We like GRUH Finance, Bajaj Corp, Supreme Industries, United Phosphorous, Unichem Labs, Swaraj Engines, WABCO India and Berger Paints in the mid-cap space,” he adds.
| Category/Index | Current Value | All-time high | Date | %chg |
| Broad | ||||
| S&P BSE SMALL CAP | 5947.15 | 14239.24 | 08/01/2008 | -58.2 |
| S&P BSE MID CAP | 6173.47 | 10245.81 | 08/01/2008 | -39.7 |
| S&P BSE 500 | 7694.18 | 8991.42 | 08/01/2008 | -14.4 |
| S&P BSE 200 | 2502.22 | 2776.96 | 08/01/2008 | -9.9 |
| S&P BSE 100 | 6295.22 | 6760.43 | 08/01/2008 | -6.9 |
| Sectoral | ||||
| S&P BSE REALTY | 1379.18 | 13848.09 | 08/01/2008 | -90.0 |
| S&P BSE POWER | 1618.16 | 4929.34 | 08/01/2008 | -67.2 |
| S&P BSE CAPITAL GOODS | 9240.45 | 21020.97 | 15/11/2007 | -56.0 |
| S&P BSE METAL | 9288.67 | 20494.62 | 04/01/2008 | -54.7 |
| S&P BSE OIL & GAS | 8910.45 | 14268.89 | 15/01/2008 | -37.6 |
| S&P BSE CONSUMER DURABLES | 6180.61 | 8221.12 | 07/12/2012 | -24.8 |
| S&P BSE BANKEX | 13267.54 | 15335.89 | 20/05/2013 | -13.5 |
| S&P BSE FMCG | 6751.17 | 7600.65 | 24/07/2013 | -11.2 |
| S&P BSE IT | 8455.06 | 8812.08 | 15/10/2008 | -4.1 |
| S&P BSE HEALTHCARE | 9637.82 | 9979.76 | 11/10/2013 | -3.4 |
| S&P BSE AUTO | 12239.78 | 12263.55 | 01/11/2013 | -0.2 |
| At 1215 hours | ||||
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