The Hindu Business Line : Mid-caps back in vogue

SHARES of mid-cap companies have been moving up right from the beginning of this month, outperforming large-cap companies, even as concerns over transaction tax and uncertainty over the equity market's outlook continue.

Within the mid-cap stocks, the interest is in scrips without the derivatives trading facility and which have low floating stock.

The active interest in mid-cap stocks is seen from the NSE's CNX Midcap index outperforming the broader S&P CNX Nifty index this month. The mid-cap index has also gained more than the CNX 500 index.

Between July 1 and July 16, the CNX Mid Index gained 6.19 per cent from 1,538.30 to 1,633.60.

During the same period, the S&P CNX Nifty provided positive returns of just 1.4 per cent from 1,537.20 to 1,558.80. The Nifty Junior index, which also includes mid-cap companies, rose by 3.25 per cent from 2,944.45 to 3,040.35 and the CNX 500 index gained 1.70 per cent from 1,270.85 to 1,293.60.

Brokers said there is active interest in the mid-cap stocks due to varied factors. Among the list are the attractive valuations of several companies and these companies are likely to report good financial performance in the first quarter of the current fiscal.

Another reason is that these stocks had fallen sharply in the last couple of months and now they are attractively priced.

Said Mr Sandeep Shenoy, Strategist at stock broking firm Pioneer Intermediaries, "There is value buying in mid-cap stocks."

He said the earning momentum is maintained by most of the mid-cap companies and earlier they were out of flavour.

A dealer with a domestic broking firm said in the last year, there was interest is in mid-cap stocks but due to uncertainty in the market, these stocks fell sharply.

"With uncertainty in the market following the formation of the new government and the Budget also gone, the interest is back in mid-cap stocks," he said.

The interest in mid-caps is also seen from the rise in trading volumes in the last few days.

The turnover on the BSE and the NSE has more than doubled this week.

The volume this week declined over transaction tax fears. The number of shares traded on the BSE increased from 6.60 crore on July 12 to 17.16 crore on Friday; on the NSE, the volume jumped from 17.37 crore shares to 39.13 crore.

In value terms, the turnover on the BSE increased from Rs 1,012 crore to Rs 1,940 crore. On the NSE, it increased from Rs 2,898 crore to Rs 4,563 crore.