Among sectors, capital goods, auto ancillaries, chemicals, constructions, realty, entertainment, financials, hotel & restaurants, information technology (IT), plastic products, steel, sugar, textiles, and tyre sectors have led from the front.
With the past three weeks gain, the S&P BSE Smallcap
index has recovered 39.2 per cent from its 52-week low touched on March 24, 2020. In comparison, the S&P BSE Sensex and the S&P BSE Midcap index have bounced-back 35.3 per cent and 32.8 per cent, respectively, from their 52-week lows, hit on the same date.
“Small-caps will take a much longer time to recover as far as earnings are concerned compared to their mid-cap and large-cap peers. Some may even find it difficult to pay the principal and the interest on their borrowings and may fold up. Investors should take money off the table now,” says Gaurang Shah, head of investment strategy at Geojit Financial.
After a highly stringent two-month lockdown, the Indian government is clearly moving toward a step-by-step approach to restoring normalcy. While these relaxations would help improve the supply-side situation, the underlying demand trend remains the key monitorable.
Motilal Oswal Securities expects the governments (Central and State) to progressively keep relaxing the lockdown norms further. As a result, the interplay of health and economic crisis holds the key to how markets
behave in the near term.
“Our Nifty target of 9,900 for March-end 2021—with upside/downside scenarios of 11,500/6,700—implies unattractive risk-reward after the recent rally. Labour shortages and the execution of long-term reforms remain key variables,” wrote Gautam Chhaochharia, head of India research at UBS in a June 3 note co-authored with Dipojjal Saha and Tanvee Gupta Jain.