Equity investors are increasingly eyeing mid-and small-cap shares. This is noticeable from the recent Securities and Exchange Board of India (Sebi) data that points towards a sharp fall in the market share of top 100 listed securities in the overall exchange turnover. On the National Stock Exchange (NSE), its share fell to 57% in the month of January ?10, as compared 75.4% in December ?09 and 88.9% in April ?09. In the financial years ?09, ?08 and ?07, market share of top 100 securities were in excess of 80%.
?Fall in market share indicates the growing depth and breadth of the Indian equity markets,? says Tridib Pathak, director, equity at IDFC Mutual Fund. A broad-based economic growth and improving depth of stock markets is likely to evince interest in stocks beyond large cap stocks, he pointed out. Latest data indicates that BSE Midcap (136%) has outperformed BSE 100 stocks (93%) in the last one year which is likely to lead to increased focus for the mid and small cap stocks.
All thanks to the fall in market share, the overall daily turnover on the bourses cash segment has also come down in recent months. The average daily turnover on the NSE cash segment in December ?09 fell to Rs 13,900 crore as compared to Rs 18,147 crore and Rs 16,224 crore recorded in the month of October ?09 and November ?09 respectively. During January though, the average daily turnover picked up marginally at Rs 17,800 crore.
Others feel this trend is on the back of huge valuation gap between large cap and mid cap counters supported by impressive quarterly results. ?January was the best month for mid cap stocks with CNX Mid cap index touching their 52-week high,? said Gopal Agrawal, head of equity at Mirae Asset Global Investment. He said mid cap companies in sectors like airline, auto, financials, pharma and commodities had then came out with good quarterly numbers.
Some market participants expect the trend to reverse in the medium term. ?Historically in a rising interest rate scenario, mid cap stocks have largely underperformed. Despite the rate hike, if the system has enough liquidity, mid cap companies will continue to perform better.? says Agrawal.