Sensex up 169; mid-caps surge

Manu P Toms

Mumbai, Nov. 30 -- While the 30-share Sensex sustained its rally on Friday, following better than expected GDP numbers and ended at a 19-month high at 19,339.90, up 0.88% from its previous close, the focus is shifting from blue chip stocks to mid-caps.

While they were beaten badly in the market turmoil last year, mid-cap stocks have now witnessed a steady rise. According to analysts, the mid-cap performance so far is largely in line with the broader Sensex.

But, it is expected to see faster growth in the days to come. The slightly higher growth figure shown by mid-caps (see graphic above) is just a harbinger of this broader trend.

"In a rally, first the front line stock moves and then the mid-caps follow," said Sharan Lillaney, a mid-cap analyst at Angel Broking.

"Given that trend, there will be greater focus on mid-caps now," he added.

On Friday, out of 246 mid-cap stocks on the Bombay Stock Exchange (BSE), 176 moved up while 68 declined.

Overall, mid-caps have shown a rise of 22.64% on a year-on- year basis. The underlying rationale being that mid-caps are benefitting from the clear shift in the priorities of foreign institutional investors (FIIs) who earlier used to pick up investments only in large-cap stocks.

"FIIs are now picking up many mid-cap stocks whose performance is good. There is FII inflow into aviation and mid-cap banks," said Lillaney.

"In the current rally, large-cap banking stocks have already moved up. Now mid-cap banks will move up," said another analyst, adding, "Similarly, mid-cap and small-cap pharma stocks will start moving upwards along the lines of large pharmaceutical players which are already witnessing an up-trend."

Published by HT Syndication with permission from Hindustan Times.