Stock Market News: 2023 proved to be the best year for the equity market due to better economic fundamentals of the country and heavy participation of retail investors. During this period, while small stocks remained the first pick of Dalal Street in 2023, small investors also made their presence felt. Investors investing up to ₹10,000 in the stock market may have contributed only a fraction of the trading, but they constitute one-third of the entire investor community. Experts believe that the bullish trend in stock markets has been going on for a long time. The midcap and smallcap segments are outperforming their larger counterparts.
BSE smallcap index outperforms Sensex
This year, till Friday, December 22, 2023, 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 gained 10,266.22 points or 16.87 percent. On December 20 this year, the smallcap index touched its all-time high of 42,648.86 points and on the same day, the midcap index also touched its record high of 36,483.16 points. The BSE index also touched its all-time high of 71,913.07 points on 20 December.
What is midcap and smallcap
The midcap index tracks companies whose market value is on average one-fifth that of ‘blue chip’ (companies with high share prices), while small-cap companies are around one-tenth that. Analysts attributed the rally in the equity market this year to better domestic macroeconomic fundamentals and retail investor confidence.
When do smallcaps and midcaps perform well?
“When the overall economy strengthens, the smallcap and midcap segments perform well,” said Mukesh Kochhar, National Head (Wealth), AUM Capital. Kochhar predicted 2023 to be a “big year” for equity markets. ‘ I was relieved. “We have seen new heights with broad participation,” he said.
A correction in small stocks in the near term after a huge rally
Experts believe that a near-term correction may be seen in small stocks after a strong rally in 2023. After a turbulent start, the market regained its luster in the last half of the year. Smallcap and midcap indices hit 52-week lows on March 28 this year. The BSE smallcap index hit a one-year low of 26,120.32 points on March 28, while the midcap index hit a 52-week low of 23,356.61 points on the same day.
Sensex bounced back after falling to 57,084.91
The BSE Sensex index hit its one-year low of 57,084.91 points on March 20 this year. Investors faced negative news ranging from turmoil at major global banks to macroeconomic concerns. However, the market bounced back in November and December. Analysts believe that smaller stocks are generally bought by domestic investors, while foreign investors tend to focus on ‘blue chip’ or larger companies.
This is the main reason for the surge in the market this year
Palka Arora Chopra, Director, Master Capital Services Ltd, outlined several factors as the main reasons for the market’s upswing this year. These include increased participation by retail investors, expected GDP growth of 7.6% in the September quarter and investors expecting the US Federal Reserve to cut interest rates soon.
Other factors 2024 Lok Sabha Elections In 2023 there are signs of political stability and inflow of foreign funds in the equity market. Total investment by foreign portfolio investors (FPIs) so far this year is Rs. 1.62 lakh crore has been crossed. FPIs have so far this month invested Rs. 57,300 crores have been invested.
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