Mid, small caps biggest winners as stock markets skyrocket; Jaiprakash Power up 30%, KSK Energy 20%

Written by fe Bureau | Mumbai | Updated: May 20 2014, 17:27pm hrs
BSE SensexMarket breadth was strong with 19 out of 30 BSE Sensex companies ending higher. (AP)
The bulls continued their march for the third consecutive session on Monday with the benchmark indices advancing 1% to new highs and foreign institutional investors (FIIs) being net buyers for the 20th consecutive session. Overseas funds purchased shares worth $230.6 million in the cash market on Monday, showed provisional data from stock exchanges.

The Sensex settled at a new record of 24,363.05, up 241.31 points, or 1%, from Friday's close and the Nifty advanced 60.55 points, or 0.84%, to a new closing level of 7,263.55 on Monday, when several domestic and foreign brokerages raised their targets after an overwhelming victory for the BJP in the general election.

Click for Graph: Top gainers

Cash market turnover rose to its highest level in three-and-a-half years. Shares worth Rs 36,267 crore were traded on the BSE and the NSE on Monday. Market breadth was strong with 19 out of 30 Sensex companies ending higher. The gap was even bigger in broader markets, with 2,135 shares ending positive on the BSE compared with just 715 shares in the red.

Even as benchmark indices touched new highs, the broader markets grabbed all the attention. The BSE Mid- and Small-Cap indices advanced 4-6% on Monday the biggest single-day gain in nearly five years as fund managers and retail investors were seen raising their exposure in the last few weeks.

Our market is filled with optimism. Assuming that (PM) Modi delivers on his vision, Indian equities are entering a new bull market. The equity markets, which are running on one leg of FII flows, will now get further support from domestic flows as well, said Nilesh Shah, CEO, Axis Capital, adding retail investors will start allocating money to equities.

If you look at retail investors, they look at past performance for investment. In the last one year, equities have outperformed gold, real estate, and fixed income by a margin. As investor looks at past performance as well as future potential and who are hugely under invested in equities, will start allocating more money to equities, Shah said.

Eight out of 11 sectoral indices ended positive. Banks and high-beta shares saw huge demand amid hopes of a sharp pick-up in infrastructure spending. The BSE Power index was the top performer with 10.15% gains. Others like BSE Capital Goods, Realty, Oil & Gas and Metal indices gained 5-9% on Monday.

Exchange data showed 39 companies in the BSE Mid-cap universe and 83 companies in the BSE Small-cap universe posted double digit gains on Monday. Jaiprakash Power Ventures surged 30.24% the biggest single-day gain ever to its highest level in nearly three years. Other gainers include KSK Energy Ventures (20%), JK Cement (19.7%), Jaypee Infratech (19.1%), Punj Lloyd (18.7%), and Sintex Industries (18.3%).

Somewhere, there is a left-out feeling among investors because of a sudden change in sentiment and business confidence. All these hopes are based on the fact that the Narendra Modi-government will reverse the policy paralysis and bring the economic growth on track. However, the general bullishness in the market is driving some of the stocks higher. There could be some correction and investors must wait for the Budget to take a clear view on the markets, said UR Bhat, MD, Dalton Capital Advisors.

Despite the 55%-plus gains in Mid- and Small-cap indices, fund managers see more room for upside. For instance Deutsche Bank, in its strategy report, hinted at an extended mid-cap rally going forward. Both the indices are 8-25% off their all-time peaks of 2008-09, Bloomberg data show.