Investors in BSE Midcap index pocketed big gains in Prime Minister Narendra Modi tenure so far. The BSE Midcap outperformed Sensex and Nifty in the two-year period from May 16, 2014. The index surged by a whopping 44 percent in two years. Though BSE midcap index gave only 5 percent returns between May 18, 2015 (May 16 was a Saturday) to May 16, 2016, the index jumped 37 percent between 2014-2015. Results of general elections were declared on May 16 (2014), when BJP-led National Democratic Alliance (NDA) won with a majority to form the new government.
As per analysis, 17 stocks in the BSE Midcap index zoomed over 100 percent in two years.
Now, hold your breath, out of the total, four stocks gave returns of 200-340 percent. Bajaj Finance gained 339 percent, Ashok Leyland was up 285 percent, Britannia Industries surged 240 percent and 3M India zoomed 239 percent in the period. Other stocks which gained over 100 percent include HPCL , Marico , Berger Paints , Emami , Indiabulls Housing , Piramal Enterprise and Torrent Pharma .
Kaustubh Belapurkar, Director – Manager Research, Morningstar India, said in an interview to CNBC-TV18 that good mid and small cap funds can deliver returns much more than peers. According to him, midcaps are real growth engine to an investor’s portfolio depending on the risk profile.
“Midcaps have delivered significant returns over the last three-five years compared to largecap funds but you have to be wary that they are more volatile. So you clearly need to have a long-term horizon in terms of investing in some of these funds. So, I will say even 5-7 years might be a short time because you can have cycles in the market where midcaps might underperform and since they have run up so much, you have to be a little cautious when entering this segment.”
However, even in the gaining BSE Midcap index there 20 stocks which fell in the two years. Falling around 5-90 percent, these stocks did not perform well in Modi sarkar two-year tenure so far. Among the losers are Jaiprakash Associates (down 90 percent), Jindal Steel (down 77 percent), Oriental Bank of Commerce (73 percent) and Reliance Communication (down 60 percent).
Surprisingly, all bank stocks (except YES Bank ) in the BSE Midcap index lost 20-73 percent in two years. YES Bank gained 80 percent.
In contrast, among finance stocks in BSE Midcap index, except for Reliance Capital (down 11 percent), all stocks have made some healthy gains. Besides Bajaj Finance , Bajaj Finserv and Indiabulls Housing , other gains in the space are Bajaj Holding and LIC Housing (up 45 percent and 49 percent respectively).
Similarly, all pharma and FMCG stocks gave positive returns in two years.
Macquarie says that focus on ease of doing business, Make in India, roads and railway Infrastructure and GST are steps in the right direction. “However, fallout is that near-term growth has been tepid, as businesses repair their stretched balance sheets, adjust to new ways of doing business, such as auction of resources, and await improvement in demand,” it says in a note.
In the one year-period, from May 16, 2014 the Sensex gained 15 percent while the Nifty climbed 16 percent. However, the indices fell off the cliff soon as Modi’s magic began to dwindle after a year BJP formed government with Narendra Modi as the Prime Minister. From May 18, 2015 to May 16, 2016 the market gave negative returns to investors. In that one-year period, Sensex lost 7 percent while Nifty fell 6 percent. From May 16, 2014 to May 16, 2016 the Sensex jumped 6 percent while the Nifty gained 9 percent at closing.
(Data Infograph by Ritesh Presswala)
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