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Nifty Small-cap index gives breakout. Analysts bet high on these segments

30 Aug , 2022   By : Kanchan Joshi

Nifty Small-cap index gives breakout. Analysts bet high on these segments

Fueled by recent buying by FIIs and DIIs, Nifty Small-cap index has given breakout at 9,500 levels and the index is expected to remain in uptrend. According to stock market experts the index may go up to 10,500 levels once it sustains above 9,650 levels. Market experts believe that banking, IT and consumer good sector is going to lead this rally in the small-cap segment in medium to long term time horizon. Stock market experts said that any dip in quality banking, pharma, auto and consumer goods stock in Small-cap segment should be seen as buying opportunity by positional investor who have medium to long term perspective.

Speaking on breakout in Nifty Small-cap index, Sumeet Bagadia, Executive Director at Choice Broking said, "Nifty Small-cap index is in uptrend and the index has given breakout at around 9,500. The index is facing resistance at 9,650 levels and once it sustains above this level, it may go up to 10,000 to 10,500 levels in medium term."

Expecting Nifty Small-cap index to outperform Nifty 50 index in medium to long term, Nishit Master, Portfolio Manager at Axis Securities said, "Last month, the Small-cap index outperformed the Nifty because of greater interest by domestic funds and retail investors. The outperformance of this month is on the back of the underperformance of the Nifty 50 in the last year and thus looks like a catch-up trade. We believe that this outperformance of the Small-cap index to Nifty 50 can continue for some time as the gap between their performances should narrow."

Stocks to fuel Nifty Small-cap index

On sectors that may fuel the rally in Nifty Small-cap index, Axis Securities expert said, "Sectors that we think should do well in the Small-cap index include capital goods, real estate, Auto, banking and financials, especially Small-cap Banks."

Batting strongly in favour of banking, pharma and consumer goods stocks in Small-cap segment, Chirag Setalvad, Head — Equities at HDFC Asset Management said, "One can look at banking, pharma and consumer goods stocks as these segments are expected to outperform other sectors in medium to long term. These segments constitute around 45 per cent of the net market strength and if an investor has a diversified asset allocation in these small-cap segments, then one can expect to beat the key benchmark return over the period of time."

In YTD time, key benchmark indices have delivered zero return to its investors as BSE Sensex has shed over 2 per cent in 2022 whereas NSE Nifty has slumped around 1.75 per cent in this period.

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