The Hindu Business Line : Small-cap stocks: Outperformers then, underperformers now

In the rally after elections, small-cap stocks were in news for outperforming the broader market. Yet again they are in news – this time for underperformance.

The BSE Small-Cap index managed nearly twice the Sensex gains in the period from May 15 (the day just prior to election results) to June 4, the recent high for this index at 6,525.

The index was up 52 per cent over this period and in fact peaked out before the Sensex did.

The Sensex touched its recent high on June 10.

Top movers in the small-cap basket post-election were mainly the stocks of realty players such as Sobha Developers (up 122 per cent), Marg (up 116 per cent), Unity Infra Projects (up 110 per cent) and Kolte Patil Developers (up 105 per cent).

Mid-caps

In the mid-cap space too, the ones that led from the front were the infrastructure and realty players – Gammon Infra Projects, Simplex Infrastructure and Puravankara Projects.

However, the BSE Small-Cap index has also been quick to correct in the post-Budget meltdown.

In the four sessions after the Budget, the index has lost 18 per cent, plunging much more than the Sensex, which has declined 11 per cent.

While the index stocks have undoubtedly seen “basket selling”, it is not clear why small-caps have followed suit, as retail investors have indulged in sporadic buying in recent trading sessions. The stocks that have fallen the most this week are not the top gainers after the elections, though these counters weren’t spared of deep cuts.

Losers

From their prices on June 4, Sobha Developers has lost 19 per cent, MARG is down 28 per cent, Kolte Patil Developers is down 41 per cent, Gammon Infra Projects shed 12 per cent, Simple Infrastructure lost 14 per cent and Puravankara Projects discarded 37 per cent.

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