The Hindu Business Line : Smart recovery by mid- and small-cap stocks

Mumbai, Jan. 23 Mid-cap and small-cap stocks along with the Benchmark index made a smart recovery from the carnage of the past two days. Though the mid-caps outperformed the Sensex, the small-caps underperformed on Wednesday. The former was up by 8.15 per cent while the latter was up by 3.96 per cent.

In the mid-cap sector 234 scrips advanced while 38 declined. Whereas in the small cap segment 310 scrips advanced and 169 declined. Some of the mid-cap stocks that shined bright were Penland Ltd, which was up by a whopping 41.05 per cent; Ansal Infrastructure jumped 30.24 per cent and Mahindra Life up by 27.50 per cent.

The small cap segment too saw certain stocks that did exceedingly well. Some of them include Murli Industries, which was up by 20 per cent, Tantia Constructions, which was up by 19.48 per cent, and Varun Industries, which was up by 19.38 per cent.

Margin calls

When asked why there seemed to be more action happening in the mid-cap sector than in the small-cap sector, market men said that they believed it has to do with the margin calls that led the markets to crash just two days back.

“Most of the stocks in the small-cap sector are penny stocks. These penny stocks are operator driven. Some of these operators would have gotten stuck due to the margin limits put by the exchanges on the brokers in the last two days.

“Mass participation is not there in these penny stocks. It is mostly the small investors and speculators that trade in these stocks. This could be the main reason why the mid-caps did much better than the small-caps,” said a sub-broker with a brokerage in town.