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Neo-Dawns of Dalal Street—Smallcaps and Midcaps

The shadow of the small caps and the mid caps are looming over the top of the large caps!!!! Both the investors as well as the market experts were worried and placid over the chequered performances of the nifty and on the other hand the sensex need only look at the other side of the garden that is the broader markets where the picture appears to be considerably brighter as the old saying goes that the grass is always brighter on the other side. Both the small caps as well as the mid caps indices on both the BSE and NSE are on the rampage making the new all time seven year high. The little bit of the gloom surrounding the large cap stocks are not appearing to reflect the broader markets and there could be ample reasons to support it.  Actually both the nifty as well as the sensex has been pulled down by the performances of the mining firms, capital goods, public sector banks and the metal. The financial sector stocks have weightage of 28% in sensex as well as the nifty and the capital goods have 7% in the sensex as well as the nifty and as such these sectors have performed badly over the past 12 months and as such the over concerns over the revival of the non performing loans and the investment revival are clouding the investor’s mindset.

Comparatively the mid cap indices are extremely diversified with companies from various sectors just for example the BSE midcap index has 247 companies where as the small caps index has 477 companies and on the other hand the NSE mid cap and the small cap have 100 companies each. On the other hand the weightage of the finance industry and the banks is just close to 8%. If we look at the mid cap indices these stocks such as Century textiles, Reliance communications and Bharat electronics have led from the front for the gains besides the Advanta, Network-18, JK Tyre, HDIL, Panacea Biotec, Zen Technologies are among the top small cap  performers. The past data suggests that when in the Bull Run the mid cap and the small cap indices underperform the benchmark indices and conversely during the bearish times. If we analyze since hitting the tank during the August of 2013 the BSE Mid cap has gained close to 110% and the and the small cap index has clocked 128%  as compared to the sensex which has gained a mere 56 % in comparison.