Info Edge sells stake in company, Domestic inflation cools down & more

Nifty50: 18,601 ▲ 38 (+0.2%)
Sensex: 62,724 ▲ 99 (+0.1%)

Namaste, friends !

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• Benchmark indices close marginally higher, after range-bound trading 
• In all, 37 of the Nifty50 stocks closed in the green
• Domestic industrial production rose 4.2% YoY in April 2023

Among the Nifty sectoral indices, IT (+1.5%) and Realty (+1.4%) were the top gainers, while Bank (-0.1%) and Pharma (-0.04%) saw meagre losses.

What’s trending

⭐ Info Edge sells stake in company 

Info Edge agreed to sell its entire shareholding in one of its associate companies, Happily Unmarried Marketing to VLCC HealthCare. The total consideration of the deal is ₹61 crore through a mix of cash and share swap. Following this announcement, Info Edge shares gained over 3% today.  

⭐ PI Industries gains traction 

Shares of PI Industries ended with gains of over 3% on back of strong revenue growth by its largest client, Japan-based Kumiai Chemical Industries. The company reported 23% revenue growth for financial year 2023 and upgraded its earnings forecast for the rest of the year. Experts believe a solid show by Kumiai Chemical is positive signs for PI Industries. 

⭐ Cochin Shipyard rises on order win  

The defence PSU’s shares rose by over 3% intraday after the company emerged as the lowest bidder for a contract from the Indian Navy to upgrade Indian naval ships. This new order has an estimated contract value of ₹300 crore and has to be executed in 24 months. 

⭐Domestic inflation eases further 

India’s retail inflation fell to a 2-year low of 4.25% in May 2023 from 4.7% in the previous month and firmly below the market forecast of 4.42%. The cool down in prices of food, edible oil as well as vegetables helped lower inflation and managed to stay below the RBI’s upper tolerance limit for the third consecutive month.

In Focus

Investors turn to small-cap funds

Small-cap mutual funds are receiving increased attention from investors despite overall inflows in the equity category declining by 50% month-on-month to ₹3,240 crore in May 2023. Small-cap funds, however saw a 50.4% jump in net inflows to ₹3,282 crore, as per data released by industry body, AMFI. But why are investors flocking to small-cap funds? Let’s take a look.     

Small-cap funds outperform 

In the past one year, the top 10 small-cap funds by AUM gave returns of over 20%, while large-cap funds could deliver only 12.1%. On the other hand, Nifty Smallcap 250, which tracks performance of leading small-cap companies, has risen 15.5% since April 2023. This is more than double the 6.9% rise in the Nifty50.   

Experts believe high returns offered by these small-cap funds could be one of the key reasons for high net inflows from investors. Also, significant corrections in small-cap stocks at the start of 2023, offered investors great opportunities to buy beaten-down but quality small-cap companies. 

Wider investment opportunities

Furthermore, small-cap funds have a large universe of stocks i.e. beyond top 250 companies to identify high-return investment opportunities. In comparison, a large-cap fund has a limited universe of top 100 companies to generate returns. This could be another reason why retail investors are gravitating towards small-cap stocks.  

As a result of this, equity mutual funds saw net additions of 10.9 million folios in the last one year, of which 30% belongs to small-cap funds, which indicates increased interest of retail investors towards small-cap funds.

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