100 days of Modi 3.0 government: Sensex up 6,300 points, 18 smallcaps turn multibagger

Sidestepping all the worries around hike in capital gains tax, Street favourite BJP not getting the majority mark in the Lok Sabha elections and controversies surrounding Sebi chief Madhabi Puri Buch, Sensex has rallied nearly 6,300 points or 8.2% in the first 100 days of Modi 3.0 government.

The road to the century-mark, which coincides with PM Narendra Modi’s birthday, has seen at least 18 smallcap stocks giving multibagger returns, shows data from ACE Equity.

During the period, the BSE Smallcap index is up around 18%. A clear shift is being seen from momentum plays to defensives as BSE IT index is the top sectoral gainer (22%) followed by BSE Healthcare index (22%). Consumer durables is at No.3 with 17% return in the first 100 days.

On the other hand, metals index is down over 3% while realty has lost 1% of its value.

Smallcap stocks

Market data shows that the first 100 days of the Modi government saw at least 18 counters from BSE Smallcap index giving multibagger returns. Refex Industries was the top gainer during the period as the stock rallied 221% in just 100 days. Other top winners are PC Jeweller (175%), Balu Forge Industries (167%), Gravita India (131%), PG Electroplast (118%), Godfrey Phillips India (114%) and Neuland Laboratories (103%).

Also read: Nilesh Shah’s market musing: Experienced investors making less money, how long can this continue?

What should investors do?

Notwithstanding the optimistic view from a long-term perspective, most investors are cautious on the markets in the near-term due to tax hikes on equity capital gains, possible slowdown in government capex and potential policy risks.

“We remain bullish from a long-term perspective as investments driven GDP growth drives corporate earnings. Domestic flows could trend down to a more sustainable level in the near term but potential improvement in foreign flows would act as a cushion,” global brokerage firm Jefferies said in a recent note.

Domestic brokerage firm Prabhudas Lilladher has valued Nifty at PE of 20.2x and arrived at a bull case target of 28,564.

Also read: US Fed meeting begins today. Does the stock market need a 25 or 50 bps rate cut?

“We believe expectations of strong festival season demand; rural revival and interest rate cuts will provide support to markets. We believe US elections are the most important factor to watch out for given rising geopolitical tensions globally,” Prabhudas said.

The brokerage expects tilt towards defensives like consumer, durables, building material, IT services, pharma and telecom, given rich valuations in some growth sectors.

(Data: Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own and do not represent the views of The Economic Times)