The S&P BSE Midcap index reached a record high of 40,685.56, up about 1% in Wednesday's intraday trade, following a robust advance in power, pharmaceutical, and consumer durables businesses.
The S&P BSE Midcap index advanced for the third day in a row, rising 3.5%. On Tuesday, the index exceeded its previous high of 40,282.49, set on February 8, 2024. With Wednesday's increase, the BSE midcap index has recovered roughly 10% from its March low.
"March's sell-off was expected. It is usual for the markets to see some profit taking as the fiscal year comes to a finish. That said, I believe the worst is gone for mid- and small-cap stocks, and investors may begin to pick selectively from these two market groups," said Kishor Ostwal, managing director of CNI Research.
Sail, Bombay Burmah Trading Company, Tata Communications, GMDC, and Shivam Autotech are among his chosen mid- and small-cap stocks, to which he may have considerable exposure.
Aside from year-end profit booking, reports say that sentiment in March regarding broader markets was also dampened due to Sebi's warning against froth/excessive valuation building in the mid and small-caps.
Meanwhile, Laurus Labs, Indian Renewable Energy Development Agency (Ireda), Petronet LNG, Tata Elxsi, Whirlpool of India, JSW Energy, Tata Technologies, and Schaeffler India have all recovered between 5% and 8% from their March lows.
Laurus Labs reached a 52-week high of Rs 448 on Wednesday, rallying 8% on expectations of higher earnings. In earnings calls for the December quarter (Q3FY24), management stated that a slower Q3 performance could return due to a healthy order book and excellent commercial execution beginning in Q4FY24.
IREDA shares were also stuck in the upper circuit for the second straight day, up 5% at Rs 157.20 after the state-owned clean energy bank reported record loan growth for the fiscal year 2023-24 (FY24).
In an exchange statement filed after market hours on Monday, Ireda reported the highest-ever loan sanctions of Rs 37,354 crore in FY24, with loan disbursements of Rs 25,089 crore. With this, the overall loan book now stands at Rs 59,650 crore, representing a record rise of 26.71 percent.
Voltas and Whirlpool of India, both consumer durables companies, have gained 3% and 5%, respectively, after the Indian Meteorological Department (IMD) warned of high heat in Central India in April.
Analysts at Sharekhan expect the rally in the broader markets to continue for some time. The Nifty50 index, they added, had reached a fresh high, and the broader markets were likely to follow suit.
They anticipate that companies in these two market groups will report good earnings in the March 2024 quarter (Q4FY24), which would boost these equities higher for some time.
Gaurav Dua, Senior Vice-President, Head of Capital Market Strategy & Investments at Sharekhan by BNP Paribas stated, "Typically, the rally in the broader markets lasts 16 - 22 months. Right now, the up move has lasted for around 17 months. So, from the upper mark of 22 months, we still are a bit far away. The rally in the broader markets can go on for another 4 - 6 months. Global cues are also supportive. That said, one needs to be selective as this could be the last phase of the rally in the mid-and small-caps. Historically, the fall in these two indexes post the prolonged rally has been to the extent of 30 - 35 per cent."
