Retail investors gung-ho on D-Street; these smallcap picks delivered up to 925% return in a year

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The ongoing rally on Dalal Street has made retail investors buoyant with individual investors raising their stakes in 409 BSE-listed firms since March 2020.

With a rally of 921%, smallcap firm Optiemus Infracom emerged as the top gainer in the list. Shares of the company have jumped to Rs 197.60 from Rs 19.36 on March 3, 2020. Individual investors had a 3.73% stake in the company as of December 31. It was 3.07%, 2.81% and 2.73% as of September 30, June 30 and March 31, respectively.

Other smallcap players including Biofil Chemical & Pharmaceutical, Bharat Immunologicals & Biologicals, Urja Global, Dhanada Corporation and Xelpmoc Design have also gained 905%, 761%, 456%, 452% and 447%, respectively, during the past one year.

Of late, the domestic equity markets have seen a broad-based rally that has spanned across sectors and market capitalisation. The BSE Sensex, Midcap and Smallcap index have gained 101%, 118% and 144%, respectively, from their respective March 2020 lows.

Going with market experts, sustained inflows by foreign institutional investors and liquidity measures taken by the government and RBI supported the rally.

“Valuations for the market as a whole may be stretched, but this rally is not without fundamental backing. Business sentiment is very positive. We have seen an operating performance of a very broad range of corporates surprise on the upside,” B&K Securities said.

The brokerage further added that the current trend of a broad-based market may continue for long. If you are looking for some investment options in the broader space, B&K Securities is positive on Bajaj Consumer Care, BASF India, Gateway Distriparks, Himatsingka Seide, Kalpataru Power and Prism Johnson.

On the other hand, Motilal Oswal Financial Services is bullish on Varun Beverages, AU Small Finance Bank, Max Financial, Ashok Leyland, SAIL, JK Cement, IEX, Crompton Consumer and L&T Tech.

Neuland Laboratories (up 395%), Dixon Technologies (up 376%), Laurus Labs (up 336%), Tejas Network (up 270%) and 3i Infotech (up 268%) stood among other players in the list which have rallied more than 250% during the past one year.

On sectors which retail investors should keep an eye out, Siddhartha Khemka, Senior Vice President, Head-Retail Research, Motilal Oswal Financial Services said: “Corporate earnings growth are showing tangible momentum. Earnings upgrades are seen for the second consecutive quarter. Overall, from the next 12 months perspective, we are positive on IT, select BFSI, healthcare, telecom, auto and consumer sectors. The push for capex and investments could trigger the revival of an investment cycle, which could then spread to multiple sectors–cement, capital goods, infra and construction, real estate and metals,” he added.