At least a dozen smallcap shares delivered 50-100 per cent since Lok Sabha elections 2024 kicked off on April 19. The rally in these smallcap shares were seen in the backdrop of a mere 2 per cent rise on Sensex and Nifty during the same period. With the election outcome just a week away, analysts feel it would be prudent for investors to stick with quality stocks, preferably largecaps.
RattanIndia Power Ltd has been the only smallcap stock from the BSE Smallcap index that doubled investor wealth since April 19, the day six-week long elections kicked off. It rose 101 per cent in te election rally. Defence-related stocks such as Cochin Shipyard Ltd, Bharat Dynamics Ltd, Garden Reach Shipbuilders & Engineers Ltd and Mazagon Dock Shipbuilders Ltd delivered solid returns, so did Shakti Pumps (India) Ltd, Johnson Controls – Hitachi Air Conditioning India Ltd, Century Enka Ltd, Finolex Cables Ltd and Jupiter Wagons Ltd.
“Smallcaps have been doing well recently and may continue to do well till the election results are announced. However, considering that results might lead to significant volatility in the markets. We prefer cash and largecaps in that order over midcaps and smallcaps,” Samco Securities told Business Today in a survey.
From a level of Rs 1,077.95 to Rs 2,020.50 on Wednesday, shares of Cochin Shipyard Ltd rallied 87 per cent in the election rally. Bharat Dynamics Ltd soared 70 per cent during the same period. Garden Reach Shipbuilders & Engineers Ltd (67 per cent) and Mazagon Dock Shipbuilders (56 per cent) jumped while Shakti Pumps (India) Ltd advanced 57 per cent during the same period. Bets of BJP retaining power and, thus, political continuity, led to buying in defence stocks.
Analysts surveyed by Business Today expects PSU stocks in the railways, defense, and BFSI sectors should react positively if there is policy continuity.
Johnson Controls – Hitachi Air Conditioning India Ltd, Allsec Technologies Ltd, Century Enka Ltd, Kirloskar Pneumatic Company Ltd, Finolex Cables Ltd and Jupiter Wagons Ltd.
“In times of increased political uncertainty, it is wise for investors to be cautious and focus on stability. Preferring largecap stocks over midcap and smallcap counterparts can offer a more robust investment strategy. By implementing strict stop-loss measures on mid-cap and small-cap positions, you can effectively manage volatility. On the other hand, large caps provide a higher level of stability,” said Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking.
Recenly, CLSA identified 54 out of 183 liquid stocks, which are perceived as direct beneficiaries of the Modi government’s current policies. The CLSA list included Reliance Industries, NTPC Ltd, Larsen & Touro Ltd, NHPC Ltd and Power Finance Corporation Ltd. Others in the list included Bharti Airtel Ltd, Mahanagar Gas, Indus Towers, Ashok Leyland and UltraTech Cement.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
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