197 smallcaps offer double-digit returns as markets continue record-breaking run in August

Domestic markets continued their record-breaking run even in the month of August, but the gains were steady with Sensex gaining close to 1%. The rally was also broad-based with the smallcaps outperforming the benchmark as the BSE smallcap index was up around 1.25% during the month.

This was reflected in the gains of the broader market as 197 smallcaps offered double-digit returns in August with the highest return going as high as 71% from Goldiam International.

About 8 stocks in the smallcap segment including Authum Investment, Panacea Biotech, Edelweiss Financial Services, Kitex Garments, Godfrey Phillips and RPSG Ventures rose over 50%.

In the BSE500 space, about 59 stocks delivered double-digit gains for investors. About three stocks including Edelweiss Financial Services, Godfrey and PCBL were up over 50%.

The midcap gains were a bit underwhelming during the August month with just 14 stocks rising in double-digits. Oil India was the top gainer in this pack at 28%, followed by Trent and PB Fintech, whose shares were up just over 20%.The Sensex blue-chip stocks had a mixed run the during the month with 20 components in the benchmark rising and the rest of them ending with cuts. Bajaj Finserv, HCL Tech and Bharti Airtel were among the top gainers in this pack.Among the sectors that were top performers include healthcare, consumer durables and IT. In the healthcare segment, as many as 35 stocks delivered double-digit returns with Panacea Biotech (58%) leading the pack.

What should investors do in September?

Despite a lack of fresh triggers in the domestic economy, the market has showcased a broad-based recovery last week and breached a new high, driven by domestic inflows and renewed sentiment on the Fed rate cut in the September meeting.

Analysts said a positive shift in FII’s stance towards the domestic market will keep the overall sentiment positive. Progressing monsoon season and increasing the capacity of reservoir level brighten the prospects of rural economy and will increase discretionary spending.

In the immediate run, domestic markets will react to the Q1 GDP growth, which is the slowest in nearly 15 months.

“Investors are likely to remain watchful due to premium valuation and may keep their eye on defensive and value stocks,” said Vinod Nair, Head of Research, Geojit Financial Services.

“The recent market uptrend can largely be attributed to global stability and renewed foreign inflows. We expect this positive sentiment to continue, with the Nifty targeting the 25,500 mark soon,” said Ajit Mishra – SVP, Research, Religare Broking.

Among the key sectors, IT is demonstrating consistent strength, while others show selective participation. “In this environment, traders should focus on stock selection, favoring those with relatively stronger performance,” Mishra said.

(With inputs from Ritesh Presswala)

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