Select stocks from the broader market have managed to deliver a massive return to investors in 2021. Data shows that at least 48 stocks on the BSE have rallied more than 1,000 per cent on a year-to-date basis till December 29, while 966 players have surged between 100 per cent-1,000 per cent during the same period.
Overall, the BSE Midcap and BSE Smallcap index have advanced 38 per cent and 61 per cent YTD. On the other hand, the BSE Sensex has gained 21 per cent. With a rally of 5,376 per cent, textile player Digjam emerged as the top gainer in the list. The scrip jumped to Rs 224.50 on December 29 from Rs 4.10 on December 31, 2020. This means, Rs 1 lakh invested in this stock at the beginning of the year back has now turned into over Rs 54 lakh at present.
Adinath Textiles (up 4385 per cent), TTI Enterprise (up 4137 per cent), Raghuvir Synthetics (up 3960 per cent), Gita Renewable Energy (up 3,336 per cent), Radhe Developer (India) (up 3086 per cent), Chennai Ferrous Industries (up 2,827 per cent) stood among other major gainers in the list.
Commenting on the broader market, Swati Kulkarni, executive vice president & fund manager-equity, UTI AMC said, “Small and midcap indices’ valuations are at a premium to large cap valuation against the historic trend of discount. While the entire spectrum of market cap is vulnerable to exogenous shocks, smallcap and midcap space could see higher volatility than the large caps. We expect better risk-adjusted performance of large cap and quality midcaps as against the small caps in the near term.”
On the other hand, Vinod Nair, head of research, Geojit Financial Services advised investors to avoid lofty and penny stocks. “Be choosy and stick with quality,” he said.
The list further showed that players like Xpro India, Brightcom Group, Rohit Ferro-Tech, Ushdev International, Cressanda Solutions, Indian Infotech & Software, Tata Teleservices (Maharashtra), Algoquant Fintech, Automotive Stampings, NCL Research and National Standard and Ritesh Properties have also jumped over 2,000 per cent YTD.
Going ahead, Gaurav Dua, head-capital market strategy, Sharekhan by BNP Paribas said, “Returns in the equity markets are likely to moderate in year 2022 but still are likely to be in mid-double digit range given the expectations of a strong growth in corporate earnings over the next few years.”
“With the normalisation of monetary policy in developed economies as well as in India, the phase of ease money and disproportional returns in small-cap space is behind us now. It would be prudent to be selective in broader markets and reduce exposure to penny stocks, speculative and momentum plays,” Dua added.
Among the other major gainers of 2021, Pan India Corporation, Cosmo Ferrites, Waaree Renewable, MIC Electronics, Kreon Financial Services, Lloyds Steels, Globus Power Generation, Banas Finance, GRM Overseas, Tantia Construction and Sawaca Business Machines have gained between 1,450 per cent and 2,000 per cent.
Manish Jain, fund manager, Ambit Asset Management suggested investors zero in on private sector banks in 2022 on the back of revival in capex growth and relative underperformance in the last rally. He further advised investors to focus on the auto sector on hopes of strong earnings on the back of base effect.
Shyamsunder Bhat, CIO, Exide Life Insurance added that some of the companies from the infrastructure and industrial space could also do well on account of the likely increase in government spending. “We are also seeing initial signs of a recovery in corporate capex. Cement is another sector that will also benefit from the recovery in the real estate sector. We are also overweight on agrochemicals and speciality chemicals,” he said.
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