Smallcap index hits new 52-week high for 2nd day, rallies 78% since March; top smallcap stocks to buy

S&P BSE Smallcap index hit a fresh 52-week high for the second straight day at 15,336.94 on Tuesday, following SEBI’s directive on the multicap funds. SEBI notified new asset allocation guidelines for mandated the multi-cap funds, where these funds are mandated to invest minimum 75 per cent of assets in equity and related instruments (65 per cent now), with at least 25 per cent of AUM to each be invested in large, mid and small-cap stocks, by early February 2021. The BSE Smallcap index rose to an all-time high of 20,183.45 in January 2018 and plunged a massive 134 per cent to 8,622 in March this year on the back of global uncertainty. Since then the index has surged nearly 78 per cent to scale a new 52-week high. Research and brokerage firm Motilal Oswal Financial Services has chalked out five high conviction small-cap ideas which it expects to do well in the short to medium term.

The brokerage believes that its basket of five smallcap stocks are fundamentally sound with good growth potential. “One can buy this basket of 5 stocks with a potential upside of 10-15% over a time frame of 1-3 months and keep a stop loss of 7-8% on the overall basket,” it said. It has given an equal weightage of 20 per cent to each stock in the basket.

Birla Corporation: The company is a cement manufacturer which has delivered good profit growth of 32 per cent CAGR over the last five years. The brokerage firm noted that Birla Corporation’s longer-term outlook remains positive and is bound to gain market share. The stock was trading flat with a positive bias at Rs 672.30 apiece.

Also Read

PR Sundar puts up brave face as ‘finfluencers’ feel the heat

Share Market Highlights: Nifty closes under 18,600, Sensex under 62,850; Bank Nifty settles at record closing high

TVS Motor, ITC, IDFC First Bank among 97 NSE stocks to hit 52-week highs; 31 touch 52-week lows

Stocks To Watch: ONGC, BHEL, Reliance Industries, ICICI Bank, Sun Pharma, RITES, Central Bank of India

Indian Energy Exchange: The brokerage firm noted that IEX has been at the forefront of growth with a dominant position in the exchange market. it enjoys strong brand recognition among the Energy market participants. “Over the past decade (FY11– 20), volumes on IEX have jumped over 4x,” it said. After hitting a fresh 52-week high of 214.95 apiece, the stock price slipped into the red. IEX stock price was trading 2 per cent down at Rs 202.65 apiece.

TeamLease Services: The encouraging rebound in the unemployment situation and the hiring outlook corroborated Motilal Oswal’s view. The brokerage firm in its report said that as both the central and state governments look forward to liberalizing and formalizing the labour markets, TeamLease should be among the biggest direct beneficiaries. The stock was trading half a per cent down at Rs 2,427.75 apiece.

Essel Propack: The company is a manufacturer of plastic packaging material used for packaging of consumer products in the beauty and cosmetics, health and pharmaceuticals, food, home and oral care categories. The brokerage firm said that the introduction of the hand sanitizer tube has resulted in another source of revenue generation. 

KEI Industries: The company is in the business of manufacturing, sale and marketing of all range of power cables up to 400kV – Low Tension (LT), High Tension (HT) and Extra High Voltage (EHV). The brokerage firm noted that the company has delivered a good profit growth of 51.04 per cent CAGR over the last 5 years.

(The stock recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)