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Affle, Dixon Tech: 30 mid, small-caps that you can bet on at current levels

Mid-cap and Small-cap stocks
Union Budget 2020-21 was a shot in the arm for equity investors who were caught in the middle of a severe sell-off just a week before the budget presentation. While investors expected the Finance Minsiter to deliver a growth-driven budget, none had expected a post-Budget rally of this scale.

In the previous week, the frontline indices surged over 9 per cent, clocking their best-ever weekly gains (in percentage terms) in 10 months. In absolute terms, gains of nearly 1,300 points in Nifty and 4,446 points in S&P BSE Sensex were the best-ever the markets have seen. The broader markets, however, didn;t replicate the rally to exact extent with the Nifty MidCap 100 index surging 7.2 per cent on the NSE while the Nifty SmallCap 100 index leaped 6.4 per cent, ACE Equity data show.

That said, nearly 90 per cent of the stocks in the BSE 500 index — accounting for 94 per cent of India's total market cap — gained in the Budget-fueled rally last week. Of the 441 stocks that gained, only 147 outperformed the BSE 500 index, which has risen 8.6 per cent in the past five trading sessions. READ ABOUT IT HERE

However, with Budget's overhang now behind investors, market participants are turning to stock-centric approach to capitlise on maximum gains. To trade this situation, technical indicators like Relative Strength Index, which defines stocks according to their overbought and oversold condition, come handy. Market participants could consider using RSI to identify stocks which are ripe for profit booking and/or stocks that are flashingh attractive entry points.

Moreover, given the strong uptrend in the overall market, the RSI may also be used for picking stocks that have managed to conquer selling pressure even in the overbought condition. Herein, the stock continues to aggressively move forward in the selling territory, so much so that a sharp up move may see a spurt of over 10 per cent in just a few sessions.

Such a scenario not only exhibits an attractive entry point in a new bullish territory which, if sustained successfully, may even build a bullish sentiment from a medium-term persepective and may see an upside of nearly 25 per cent in the near future.

In this backdrop, a higher number of small-cap stocks are likely to enter the aggressive overbought condition, relative to mid-caps, with volumes showing a tremendous momentum. The stock prices are reflecting a firm strength which may swiftly resisit any weakness and may show potential even amid strong selling pressure.

Nearly 20 stocks in Nifty Small-cap 100 are showing strong bullish signals, compared with just 10 stocks of Mid-cap 100. This list includes.


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