Second-rung stocks delivered robust alpha to investors in India since last Diwali. The BSE MidCap and SmallCap indices have surged 25 per cent and 28 per cent, respectively, since October 24, 2022. On the other hand, the benchmark BSE Sensex gained 6.28 per cent during the same period.
With a rally of 535 per cent, The Fertilisers And Chemicals Travancore surged the most in the mid-cap space. It was followed by Rail Vikas Nigam Ltd (up 311 per cent) and Indian Railway Finance Corporation (up 237 per cent). Jindal Stainless, UCO Bank, REC and Power Finance Corporation also gained over 150 per cent during the same period.
Commenting on the outperformance of railway stocks, Suraj Prakash Nanda, Senior Investment Analyst, ICICI Prudential AMC, said, “Railway stocks performed well as orders from Indian Railways gathered pace in the form of Vande Bharat tenders, wagon and locomotive orders. Also, the government, over time has signalled its intent to award more tenders for both wagons and Vande Bharat.”
“We believe the railway sector is on a secular growth trajectory driven by a cyclical upturn in spending on rolling stock as well as greater thrust from the government to expand the railway network,” Nanda said.
On the other hand, as many as 11 stocks in the small-cap space soared over 1,000 per cent since Diwali 2022. Sical Logistics gained 2,817 per cent to Rs 215.30 on November 1, 2023 from Rs 7.38 on October 24 last year. Prime Industries, Jhaveri Credits & Capital, Remedium Lifecare, Andhra Cements, SG Mart, Jai Balaji Industries, Standard Capital Markets, K&R Rail Engineering, J Taparia Projects and Mercury EV-Tech also surged somewhere between 1,000 per cent and 2,600 per cent since Diwali last year.
Where Samvat 2079 is set to end with robust returns from broader markets, sharing his view on Samvat 2080, strategist and investor Safir Anand believes that midcaps can remain in line with markets till Diwali 2024, which means large-caps will do well and mid-caps will do reasonably well. He prefers infrastructure, hospitals, hotels, PSU banks, electronics manufacturing services (EMS), large capex plays and niche IT companies, especially catering to segments of the economy like auto, hospitals, aeronautics and defence, among others.
While sharing its Diwali stocks list, Progressive Share Brokers suggested stocks such as Automobile Corporation of Goa, Advanced Enzyme Technologies, GMM Pfaudler, Nelcast, Sadhana Nitrochem, Sudarshan Chemical and The Indian Hume Pipe & Co, GNFC, Hemisphere Properties, KPR Mill, NLC India, PNB Housing Finance, Repco Home Finance, Savita Oil Technologies, Supreme Petrochem and Union Bank of India.
On the other hand, Cholamandalam Securities picked Reliance Industries, Hindustan Aeronautics, Poonawalla Fincorp and Rail Vikas Nigam Limited.
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