The broader markets surged amidst steady trade on Monday. While the Sensex and the Nifty maintained momentum, the BSE Midcap Index ended up nearly 1.5%.
The BSE Smallcap Index joined the party and ended with over 1% gains. The top movers included momentum stocks like IGL, Exide India, Kalyan Jeweller, Paytm, Mazagon Dock. The Nifty Midcap Index 100 rallied close to 2% as well led Adani Group stocks, Polycab and Biocon. Adani Total Gas was no doubt the stars of today’s trade, closing with over 10% gains.
What’s powering small and midcaps?
Some of the key reasons supporting today’s rally are as follows –
Improvement in market momentum
Positive global cues coupled with encouraging Q4 earnings performance helped investors maintain positive momentum in the markets. This no doubt triggered gains in the small and midcap space which had seen significant correction in the past few months. The stable trade by large caps also helped boost investor sentiment.
FII buying continues
Foreign investors has been buying consistently for the past 12 days and they have net bought equities worth over Rs 40,000 crore. This has no doubt added to investor confidence, Additionally, the dollar’s weakness and the rally in rupee also improved India’s standing vis-a-vis global emerging market peers. All in all this helped in creating an encouraging investment backdrop for the small and midcaps.
US-India trade talks
The other key reason that’s keeping sentiment positive in the markets is the potentially encouraging outcome that’s expected from the US-India trade talks. There are expectations, as per US Treasury Secretary, that the first set of deals may emerge from talks with India. This has also given confidence to market participants about a potential short-term rally.