Promoters bet on own cos, raise stake in falling mkt
Companies in which promoters have invested are Jindal Stainless, JSW Energy, Gokul Agro Resources, etc.
Amidst scenario of rising concern of stretched valuations of mid and small cap stocks, the business daily, The Economic Times has come out with a report that promoters of such companies had hiked stake in the March 2024 fall. Zydus Wellness, Welspun Corp, IPCA Laboratories, Westlife Foodwork are amongst such companies which saw promoters picking up stake in the current month.
Apparently, promoters wanted to increase stake at relatively lower price that is why they have augmented holdings. This shows how much faith they have in their companies that they bought more scrip, the moment there was some price correction.
Many stock analysts have opined that the ongoing correction in mid and small caps can be only for short term. If fundamentally strong companies post quarter-on-quarter (QoQ) earnings growth going forward from here then, these can be profitable bet in the long term. “Given the strong fundamentals, and as long as earnings continue to grow quarter-on-quarter, markets are likely to remain robust over the long run,” said Shailesh Saraf, smallcase fund manager and founder of investment advisory app, Value Stocks.
Albeit, Trivesh D, chief operating officer, brokerage platform Tradejini, has deduced that such stocks could fall 10 per cent. He said, “The near-term outlook for small and mid-cap stocks in India appears subdued, mirroring the cautious sentiment of a broader market. A modest correction of around 10 per cent is likely within the sector due to profit booking, year-end accounting adjustments, and valuation biases.”
He also said that, the current market adjustment reflects a return to more sustainable pricing.
But he added that “The correction could present opportunities for long-term investors who conduct thorough research before entering this dynamic segment.”
While, Pawan Bharaddia, Co-founder & CIO of Portfolio Management Service firm Equitree Capital said, “One may use the correction to accumulate high-quality businesses in this genre as they unfold significant wealth-creating opportunities over the next couple of years.”
Other companies in which promoters have invested are Jindal Stainless, JSW Energy, Gokul Agro Resources, etc.
In last one month, Nifty Smallcap 100 index has fallen 8.84 per cent. While, Nifty Midcap 100 has corrected by 5.35 per cent.
On the other hand, S&P BSE 250 SmallCap Index has fallen 8.71 per cent.