Year Ender 2023: This year, small shares became the first choice of Dalal Street, small cap and mid cap got bumper returns.

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Year Ender 2023: Small stocks remain the first choice of Dalal Street in 2023. 2023 has proved to be a profitable year for the equity market due to the country’s better economic fundamentals and heavy retail investor participation. Experts believe that the bullish phase in the stock markets has been going on for a long time. The midcap and smallcap segments are outperforming their larger counterparts. Till December 22 this year, the BSE Smallcap index gained 13,074.96 points or 45.20 percent, while the Midcap index rose 10,568.18 points or 41.74 percent. During this period, BSE’s 30-share index Sensex rose by 10,266.22 points or 16.87 percent. On December 20 this year, the smallcap index reached its all-time high of 42,648.86 points and on the same day, the midcap index also reached its record peak of 36,483.16 points. reached at. The BSE index also reached its all-time high of 71,913.07 points on December 20. The midcap index tracks companies whose market capitalization is on average one-fifth that of ‘blue chip’ (companies with high share prices), while small-cap companies are around one-tenth that.

There was an influx in the market from retail investors.

Analysts attributed the rise in the equity market this year to better domestic macroeconomic fundamentals and retail investor confidence. Mukesh Kochhar, National Head (Wealth), AUM Capital, said that when the overall economy strengthens, the smallcap and midcap segments perform well. Kochhar termed 2023 as a big year for the equity market. He said that we have seen new heights with widespread participation. Experts believe that after the huge rally in 2023, there may be an improvement in small stocks in the near term. After a turbulent start, the market regained its shine in the last part of the year. On March 28 this year, smallcap and midcap indices had reached their 52-week low. The BSE Smallcap index hit its one-year low of 26,120.32 points on March 28, while the Midcap index hit its 52-week low of 23,356.61 points on the same day. At the same time, on March 20 this year, the BSE Sensex index had reached its one-year low of 57,084.91 points.

Global economic environment remains a matter of concern

Investors had to grapple with a host of negative news, from turmoil at major global banks to macroeconomic concerns. However, the market made a comeback in the months of November and December. Analysts believe that smaller stocks are generally bought by local investors while foreign investors focus on ‘blue chip’ or larger companies. Palka Arora Chopra, Director of Master Capital Services Limited, underlined several factors which were the main reasons for the rise in the market this year. This includes increase in participation of retail investors, higher than expected GDP growth of 7.6 percent in the September quarter and investors expecting the US Federal Reserve to cut interest rates soon, etc. Other factors are political stability after the 2024 Lok Sabha elections and indication of foreign fund inflows into the equity market in 2023. So far this year, the total investment of Foreign Portfolio Investors (FPIs) has exceeded Rs 1.62 lakh crore. FPIs have invested more than Rs 57,300 crore in Indian equity markets so far this month.

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