Enthusiasm Flattens but Hope Remains High
The year 2020 has been a great year of revelation for investors. It has taught us not to give up on equity – no matter how big the crisis is. In fact, if anything, the crisis situation is a breeding ground for abnormal returns. In spite of the immense uncertainty in 2020, there are as many as 204 stocks listed on the BSE that have more than doubled on YTD basis while an impressive 789 stocks managed to inch up by more than 25 per cent in a similar period. Risk-takers have been rewarded handsomely so far this year.
The current market rout can be attributed to the rising concerns about the resurgence of virus cases across continents. The spike in cases is high enough to push respective governments to think of imposing fresh lockdowns. And markets, by now, know well enough how lockdowns have a drastic and negative impact on the economy. Technically, global indices such as Nasdaq, for example, were getting into an overbought zone. With some consolidation and better acceptance on the status of the pandemic, the markets can be expected to be back on an upward track.
The compulsion by SEBI for multi-cap mutual fund schemes to ensure investment of 25 per cent of the funds into mid-cap and small-cap has created lot of action as well as anxiety over the past few days. As you may recall, we had kept you abreast about the possibility of a move by SEBI to broaden the list of stocks for mutual funds to invest in through our edition of Vol. 35, Issue No. 19. Further, we had also advised our readers to tilt more towards mid-cap and small-cap stocks in our edition of Vol. 35, Issue No. 20. In continuation we thought it apt to do a cover story on small-caps in this issue which answers many a question that investors would have on the top of their minds.
The current ‘small-cap’ special issue also contains the ranking of top small-cap companies listed on the bourses. This list should help you to identify quality small-cap stocks. Meanwhile, SME stocks have taken a beating in 2020. However, the SME sector remains an important player in the Indian economy. In our special story we have not only highlighted the SME IPO performance but have also provided a ranking of SME-listed companies scanned for their fundamentals and strengths. The list should be a guide to investing in the SME space.
For the remaining part of the year, volatility can be expected to be high owing to the US’ elections, the ongoing pandemic and the rising geopolitical tensions. High volatility implies wild fluctuations. A point to note here is that the large swing in equity prices in the coming months will also ensure good investment opportunities. So be ready with your financial arsenal and stay tuned to DSIJ for updates and forecasts.
RAJESH V PADODE
Managing Director & Editor