Nifty Midcap 100 index at record highs, three in every four stocks near 52 week high
73 of Nifty Midcap 100 stocks touched their 52 weeks high in the first two months of 2021.
Investors are getting handsomely rewarded for taking higher risks and betting big on midcap stocks. The Nifty Midcap 100 index ended at record highs of 24,488 on Wednesday. The Nifty Midcap 100 index has outperformed the benchmark Nifty50 index. Over the last one year, the midcap index delivered over 41.5% returns compared to 32% of Nifty50.
Unlike the past, the current rally in the midcap space is not polarized as three in every four stocks are near their 52-weeks high. As of Tuesday, out of 100 stocks of the Nifty Midcap 100 index, 73 tested their 52 week high in the first two months of 2021. Of those, 33 stocks were trading at less than 5% away from their 52-week highs.
Commenting on the rally in midcap stocks Devang Mehta, Head Equity Advisory of Centrum Wealth said, “over the last two-three years India witnessed a lot of structural reforms like GST, IBC, RERA and reformist budget coupled with COVID-19 accelerating shift from unorganised to organised saw pent-up demand coming in for mid & small-sized companies. Simultaneously, organised players were able to take up various cost-cutting initiatives that saw margin expansion which has started reflecting in stock prices now.”
Tata Power & Adani Enterprises which are quoting at their 52-week highs gave 126% & 286% returns, respectively, over the last one year. On the hand, companies like SAIL, Jindal Steel & Power & Bharat Electronics more than doubled in the last year.
Whereas stocks like Voltas, Escorts, Max Financial Services & Godrej Properties also rallied over 50%. The momentum in midcap stocks is likely to continue as many companies in this space are market leaders in their respective sectors with good pricing power, market share and ability to improve margins can benefit from unorganized players losing market share.
“Going ahead investors should remain market cap agnostic and look for value buying opportunities in sectors like paints, electrical goods, cement, BFSI, pharma & healthcare, agro & speciality chemicals, IT and automation companies,” added Mehta.
However, within the Nifty Midcap 100 index stocks like Yes Bank, Future Retail, ICICI Securities, Rajesh Exports, Indiabulls Housing Finance, Bombay Burmah & RBL Bank are trading much lower prices to their 52 week high.
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