2 years of Modi: Dalal Street wants more from government, small-cap stocks jump up to 2000%

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Updated: May 26, 2016 1:04:39 PM

2 years of Modi: The benchmark BSE Sensex surged nearly 5,000 points in eight months and touched its new all-time high of 29,681.77 on January 29, 2015. The 30-share index was at 24716.88 on May 26, 2014.

2 years of Modi government - Stock markets2 years of Modi: The benchmark BSE Sensex surged nearly 5,000 points in eight months and touched its new all-time high of 29,681.77 on January 29, 2015. The 30-share index was at 24716.88 on May 26, 2014. (Photo: Reuters)

Equity investors cheered when Narendra Modi led NDA government came to power on May 26, 2014. The benchmark BSE Sensex surged nearly 5,000 points in eight months and touched its new all-time high of 29,681.77 on January 29, 2015. The 30-share index was at 24716.88 on May 26, 2014.

From there onwards, the index wiped off most of their gains and hit a low of 22,951.83 on February 11, 2016. Overall, Sensex gained nearly 5 per cent in the past two year. On May 25, 2016, the benchmark index was at 25,881.17.

On the other hand, mid-cap stocks remained in limelight during this period and outpaced small-cap and large-cap stocks in the past two years. Consider this: The BSE Mid-cap index surged 31 per cent to 11079.97 on May 25, 2016 from 8485.06 on May 26, 2016. The BSE Small-cap index advance 23 per cent to 10,953.83 from 8,923.65 during the same period.

G Chokkalingam, founder, Equinomics Research & Advisory said, “In the past two years, global issues such observations from USFDA, slowdown in China and Europe coupled with drought in India majorly impacted large companies. However, fall in resource prices benefitted small-cap and mid-cap companies during the period.”

In the mid-cap space, stocks such as Welspun, Hitachi Home, Rajesh Exports, KRBL, Ajanta Pharma and Aarti Industries surged 681 per cent, 507 per cent, 316 per cent, 301 per cent, 240 per cent and 229 per cent, respectively, in the past two years.

Among small caps, stocks such as Kellton Tech Solutions, 8K Miles Software, Indo Count Industries, High Ground Enterprises and AYM Syntex shares rallied 2,142 per cent, 1,190 per cent, 1,162 per cent, 854 per cent and 833 per cent, respectively and remained among top five gainers in the space.

Siddharth Oberoi, founder, Prudent Equity said, “The government could not do any major structural changes which could have led to sustainable earnings growth. Although, the economy was helped by lower crude prices, low commodity prices and reduced inflation.”

In the large cap stocks, Asian Paints surged the most — 87.31 per cent to Rs 982.45 on May 25, 2016 from Rs 524.50 on May 26, 2016. It was followed by Maruti Suzuki (up 73 per cent), Lupin (up 62 per cent), Infosys (up 56 per cent) and HUL (up 50 per cent).

On the tepid movement of BSE Sensex, Oberoi said, “Valuations had been bid up very high initially with the hope that major changes would be unleashed by the new government. Hence, the valuations were stretched and had started factoring in expected earnings before hand.”

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