D-Street small stocks reap big gains for investors in 2024

Dalal Street minnows stole the show in 2024, giving handsome returns to investors, helped by a largely optimistic trend in the stock market and impressive retail investors' participation.

Analysts attributed the positive trend in the equity markets, where the benchmark indices shattered many records this year, to robust domestic liquidity, strong fundamentals of the Indian economy and policy continuity.

Market experts are optimistic about midcap and smallcap stocks for the next year, driven by factors like strong domestic consumption and government infrastructure spending.

Till December 23 this year, the BSE smallcap gauge has jumped 12,144.15 points or 28.45%, while the midcap index surged 9,435.09 points or 25.61%.

In contrast, the 30-share BSE benchmark SENSEX has soared 6,299.91 points or 8.72%.

Increased interest from domestic investors seeking higher returns and the valuation catch-up of smallcap and midcap stocks after prior underperformance also played a key role. These factors collectively positioned smallcap and midcap indices as standout performers this year, analysts said.

The midcap and smallcap segments tend to outshine their larger counterparts in a bull rally in the market, experts said.

The BSE smallcap gauge hit its lifetime high of 57,827.69 on December 12 this year, while the midcap index surged to a record 49,701.15 on September 24.

The blue-chip peer SENSEX reached its all-time high of 85,978.25 on September 27.

According to analysts, smaller stocks are generally bought by local investors, while overseas investors focus on blue-chips or large firms.

Overall, 2024 has been a good year for retail investors, marked by encouraging market performance, especially in midcaps and small-caps, backed by domestic liquidity and resilience in the face of FII outflows, an expert said.

The midcap index tracks companies with a market value that is on average one-fifth of blue-chips, while smallcap firms are almost a tenth of that universe.

The BSE benchmark Sensex and NSE Nifty have faced heavy corrections in recent months after a record-breaking rally due to the rich valuations of the domestic stocks.

In 2023, the BSE benchmark had jumped 11,399.52 points or 18.73%

The BSE smallcap gauge rallied 13,746.97 points or 47.52% last year, while the midcap index climbed 11,524.72 points or 45.52%.

In 2022, the BSE midcap index climbed 344.42 points or 1.37%, while the smallcap gauge declined 530.97 points or 1.80%.

The BSE barometer ended 2022 with an annual gain of 4.44% or 2,586.92 points.