Driven by bullish stock market sentiment and strong participation from retail investors, the mid-cap and small-cap indices of the BSE have given big returns, surging up to 62 per cent and outperforming the larger index Sensex so far this year.

An analysis of the three indices shows that while the small-cap index of the BSE has given a return of 62.44 per cent, the mid-cap index followed with 41.84 per cent.

On the other hand, gain in the blue-chip Sensex has been at 25.49 per cent so far in 2014.

The Sensex touched its life-time high of 27,319.85 on September 8.

The mid-cap index touched its one-year peak of 10,000.86 on September 15 and the small-cap index hit its 52-week high of 11,245.52 on the same day.

Analysts said that when markets rally, these stocks make big gains than the front-lines. But during the times of uncertainty one witnesses greater losses in mid and small-cap counters.

Market experts said that positive investor sentiment following the formation of a new government and robust foreign fund inflows have been driving the domestic equity markets.

In 2013, small and mid-cap stocks had declined as much as 12 per cent.

Retail investors are major participants in mid-cap and small-cap stocks and activity in this segment has increased over the past few months.

Marketmen say smaller stocks are generally bought by local investors, while overseas investors focus on blue-chip shares.

The mid-cap index tracks companies with a market value that is on average one-fifth of blue-chips or large firms.

Small-cap firms are almost a tenth of that.

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