The Hindu Business Line : Majority stocks in Nifty Midcap witness rise in volume

Mumbai, Oct. 6 More than two-thirds of the recently launched Nifty Midcap 50 stocks have shown a rise in volume. Analysts attribute the rise to the possibility of foreign institutional investor interest in them. “The inclusion of these stocks in the midcap has put them on the radar screen of FIIs”, said Mr Mugunthan Siva, Chief Investment Officer, Optimix, an investment services provider.

“One of the parameters for overseas investors is to invest in companies having market cap of over a billion dollars (Rs 4,000 crore) and most of these midcap companies seem to fulfil this criteria.” .

Large cap stocks that have been the focus of institutional investors until now are valued at a stiff earnings multiple making midcap stocks much more attractive, one analyst said. The near term outlook for trading volumes appears good according to some market players as trading in futures and options contracts was introduced on Nifty Midcap 50 index from October 5.

“These stocks would give a lot of arbitrage opportunities (cash and derivatives markets) and liquidity would improve giving rise to increasing trading volumes which ultimately would lead to better price discovery”, said Mr Aalap Shah, derivative analyst, Dolat Capital Markets Ltd. But fewer stocks registered a rise in prices. Analysts however maintain that these are early days and some of these stocks will pick up in a while.

“The companies which do well in the quarter results due at the end of this month will be re-rated as their attractiveness will increase”, said Mr Siva.

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