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Virendra Verma

Mumbai , Nov. 10

AFTER going into an oblivion over the last few months, small and medium cap stocks are back on the buy list of both the institutional and retail investors.

The interest in these stocks comes at a time when the benchmark indices such as the BSE Sensex and S&P CNX Nifty have seen marginal decline in the last one-week.

Brokers and analysts attribute the shift of the market interest to the sharp rise in the price of large cap stocks while the small and medium cap stocks have not moved in tandem.

Another indicator of the change in investors' attention is the rise in the broader indices more than the BSE's Sensex and NSE's Nifty in the last one month.

For instance, BSE Sensex gained 4.82 per cent in the last one month and in comparison, BSE 500 index gained 5.75 per cent and BSE 200 by 5.10 per cent.

The interest has been more in the last one week when the BSE 500 index gained by 2.55 per cent, BSE 200 by 1.70 per cent, while BSE Sensex declined by 1.27 per cent.

According to Mr V.K. Sharma, Head of Research, Anagram Stock Broking: "Small and medium cap stocks did not participate in the rally in the last few months and now the market players are shifting their positions from large cap to small and medium cap stocks."

He said the interest in small stocks is also seen from the advance-decline ratio, which has been positive despite the frontline indices falling last week.

Mr Vipul Dalal, Chief Operating Office (Institutional Sales), IL&FS Investsmart said: "large cap stocks had run up very fast and in comparison small and medium cap stocks had not moved up. Now these stocks have to move in line with the large cap stocks."

Several brokers said that the small and medium cap had remained lacklustre over the last few months following the SEBI and stock exchanges' decision to move over 600 stocks (mainly small and medium cap stocks) to trade-to-trade segment, where netting facility is not allowed. But that fear has gone and now investors are buying the stocks that have good fundamentals after their good September quarter results.

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