Are our mod-caps and small caps overheated?
Time to Think!!ЁЯТнЁЯТн
Are India Mid Caps and Small Caps Overheated?? Would Money may Flow to Sensex Stocks??
✔ Analysed movements in India's three bellwether indexes, the BSE Sensex, BSE MidCap and BSE SmallCap, since May 12, 2014 (general election results week). till December 18, 2015.
Clearly, while the BSE Sensex has had a dream run since May 2014, it is actually the MidCaps and the SmallCaps which have generated higher returns, as displayed by the performance of the two indexes.
ЁЯТе Index Returns b/w 12-5-14 and 18-12-15
BSE Sensex 8.4%
BSE MidCap 45.4%
BSE SmallCap 51.1%
These returns do not include dividends.
ЁЯТе Returns at Peak of Index
BSE Sensex 26.0%
BSE MidCap 54.3%
BSE SmallCap 59.0%
ЁЯФ╡ The above table proves that the MidCap and SmallCap have squarely beaten the Sensex, even at their respective peaks.
Valuations:
BSE Sensex 19.5x
BSE MidCap 26.2x
BSE SmallCap 62.3x
(Source: BSE website)
ЁЯТе Clearly, valuations of mid caps and small caps are stretched.
The rally in a number of mid caps and small caps could fizzle out soon. It is only a matter of time before the anomaly between the valuation of Sensex vis-a-vis mid/small caps gets corrected.
✔ A large number of "dubious" small caps (not necessarily part of BSE SmallCap index) have given abnormal returns, in spite of continued mediocre fundamentals. Investors need to be wary of such stocks and ought to carry out thoroughly due diligence, while keeping track of valuations, before entering small caps.
Let the learning continue.ЁЯРвЁЯРвЁЯРв
X'masЁЯОБЁЯТРЁЯОЙ
Are India Mid Caps and Small Caps Overheated?? Would Money may Flow to Sensex Stocks??
✔ Analysed movements in India's three bellwether indexes, the BSE Sensex, BSE MidCap and BSE SmallCap, since May 12, 2014 (general election results week). till December 18, 2015.
Clearly, while the BSE Sensex has had a dream run since May 2014, it is actually the MidCaps and the SmallCaps which have generated higher returns, as displayed by the performance of the two indexes.
ЁЯТе Index Returns b/w 12-5-14 and 18-12-15
BSE Sensex 8.4%
BSE MidCap 45.4%
BSE SmallCap 51.1%
These returns do not include dividends.
ЁЯТе Returns at Peak of Index
BSE Sensex 26.0%
BSE MidCap 54.3%
BSE SmallCap 59.0%
ЁЯФ╡ The above table proves that the MidCap and SmallCap have squarely beaten the Sensex, even at their respective peaks.
Valuations:
BSE Sensex 19.5x
BSE MidCap 26.2x
BSE SmallCap 62.3x
(Source: BSE website)
ЁЯТе Clearly, valuations of mid caps and small caps are stretched.
The rally in a number of mid caps and small caps could fizzle out soon. It is only a matter of time before the anomaly between the valuation of Sensex vis-a-vis mid/small caps gets corrected.
✔ A large number of "dubious" small caps (not necessarily part of BSE SmallCap index) have given abnormal returns, in spite of continued mediocre fundamentals. Investors need to be wary of such stocks and ought to carry out thoroughly due diligence, while keeping track of valuations, before entering small caps.
Let the learning continue.ЁЯРвЁЯРвЁЯРв
X'masЁЯОБЁЯТРЁЯОЙ
.jpeg)
.jpeg)
Comments
Post a Comment