Delivery turnover in the equity market touched a four-month high of R5,872.44 crore in January. Market players attribute this trend to the large number of investors who are betting on the mid-cap space, which has already seen a smart rally in the recent past. Over the last five months, the BSE Mid-Cap Index has gained 18.06%.
?Delivery volumes have improved with mid caps trading at attractive valuations. In August 2013, mid caps and small caps were at record discounts to large caps,? said Saurabh Mukherjea, CEO, Institutional Equities, Ambit Capital.
Mid-cap stocks such as Aurobindo Pharma (59.69%), Apollo Tyres (39.90%) and TVS Motor (44.54%) have all registered strong gains since December. Stocks like Kaveri Seed (55.23%), Bajaj Electricals (25.37%) and NIIT Technologies (25.07%) have also rallied significantly.
The BSE Mid-Cap Index currently trades at one-year forward P/E multiple of 9.83 while Sensex is at 12.42 one-year forward P/E multiple.
?The current (market) phase is characterised by an economy, which whilst it continues to be challenging, is looking to normalise; at the same time, it is also characterised by a polarised stock market, which has only just started to revert,? said Ambit analysts in a separate research note. ?The approach to portfolio construction in today?s environment results essentially in a play on ?cyclicality?, ?value? and ?small and mid caps? whilst not losing sight of ?quality?,? the note added.
According to Bloomberg data, trades totalling nearly R5,872.44 crore resulted in delivery every day in January. This is higher than December (R5,787 crore), November (R5,689 crore) and October (R5,489 crore). September 2013 saw higher delivery turnover at R5,996 crore.
Experts add that delivery volumes have remained steady as long-term investors like LIC have been churning their portfolio. ?LIC has been rotating its investments after booking profits in the recent rally,? said an official, on conditions of anonymity.
Meanwhile, delivery-based trading as a share of total turnover has managed to stay around 44% mark in January, which is higher than most months of 2013. The average share of delivery-based turnover (R5,676 crore) in 2013 was 42.22%.