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HomeMoneyThis year 'small packets' made a big bang in the stock market,...

This year ‘small packets’ made a big bang in the stock market, like this the bag of investors

Highlights

  • Up to 60 percent return to investors investing in small companies
  • This year has been very good for Indian stock markets.
  • Small stocks benefit the most from the good performance of the stock markets

New Delhi
Stock Market Flashback 2021: This year i.e. in 2021, the shares of small companies have given big returns to the investors. Investors who have invested in small companies have got returns of up to 60 percent this year amid strong rally on Dalal Street. It is believed that this performance of small stocks will continue in the new year as well. Despite the uncertainties created by the COVID-19 pandemic, the Indian stock markets have had a very good year.

Small stocks have benefited the most from the good performance of the stock markets. In January, the 30-share Sensex of BSE had reached a historic level of 50,000 points. It reached the 61,000 mark in October. Till December this year, the midcap index has gained 6,712.46 points or 37.41 per cent. On the other hand, Smallcap has gained 10,824.78 points or 59.81 percent. In comparison, the BSE Sensex has gained 10,146.15 points or 21.24 per cent.

Tough times for these stocks from 2018 to March 2020
Partha Nyati, Founder, Tradingo said, “We are structurally bullish markets where midcaps and smallcaps outperform the main indices. However, midcap and smallcap stocks had a tough time from early 2018 to March 2020 due to the announcement of long-term capital gains (LTCG) and regulatory changes in the mutual fund industry. Even the shares of many smaller companies are performing well. The strong rally in the stock markets was helped by liquidity support from global central banks and widespread vaccination.

High level of midcap and smallcap indices
On October 19 this year, the midcap index reached its all-time high of 27,246.34. Smallcap also reached a record level of 30,416.82 points on the same day. The 30-share BSE Sensex had reached its all-time high of 62,245.43 on October 19. In the beginning of the year 2020, the stock market was also badly affected due to the pandemic. But since then the markets have performed quite well.

Also read: Bitcoin Down 31% From Top High But This Crypto Jumped 52%

At the end of the year, FPI sold the shares of big companies.
Abhay Agarwal, Founder, Piper Serica said, “There are several reasons why smaller stocks outperform the main index. After outperforming in the year 2017, smaller stocks had outperformed larger stocks. Besides this, foreign portfolio investors have sold off large companies in the last months of this year, Agarwal said. On the other hand, domestic institutional investors (DIIs), high wealth people (HNIs) and retail investors continue to invest in smallcaps.

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