Buoyed by robust stock market sentiment, the small-cap and mid-cap indices of the BSE have rallied by up to 56 per cent, outperforming the larger index — Sensex — this fiscal.
On the other hand, gain in the blue-chip index Sensex has been at 24.11 per cent from April 1 till date, an analysis of the three indices showed.
The Sensex touched its all-time high of 27,969.82 yesterday.
The mid-cap index touched its one-year peak of 10,068.63 on September 16 and the small-cap index hit its 52-week high of 11,352.01 on the same day.
Experts said when markets perform well, smaller stocks make big gains than the front-lines. But during the times of uncertainty, greater losses are seen in mid and small-cap scrips.
Analysts said bullish investor sentiment following a new government at the Centre and robust foreign fund inflows have been fuelling rally in the domestic equity markets.
Since the beginning of this year, overseas investors have infused a net amount of Rs 82,266 crore (USD 13.7 billion) into the equities, while they invested a net of Rs 1.36 lakh crore into the debt market (USD 22.5 billion) taking the total to Rs 2.18 lakh crore (USD 36 billion).
Retail investors are major participants in mid-cap and small-cap stocks and their activity in this segment has been upbeat over the past few months.
Market players say smaller stocks are generally bought by local investors, while overseas investors focus on blue-chip shares.
The mid-cap index tracks companies with a market value that is on an average one-fifth of blue-chips or large firms. Small-cap firms are almost a tenth of that.