BSE Smallcap index hits fresh 8-year high

Shares of smallcap companies are on a roll with the S&P BSE Smallcap index hitting an over eight-year high on the BSE on Wednesday.

At 02:43 pm, the S&P BSE Smallcap index, the largest gainer among broader indices, was up 0.75% at 12,527, as compared to 0.62% rise in the S&P BSE Midcap index and 0.18% gain in the benchmark S&P BSE Sensex. The smallcap index hit an intra-day high of 12,529, its highest level January 18, 2008.

Ramco Industries, Sequent Scientific, BF Investment, J B Chemicals & Pharmaceuticals, Kalyani Investment Company and Tata Investment Corporation from the smallcap index rallied over 10% each on Wednesday.

Engineers India, Bodal Chemicals, Ipca Laboratories, Hikal, Excel Industries, Majesco, BF Utilities and JK Tyre are among few trading higher between 5%-10% on the BSE.

Engineers India surged 9% to Rs 254, after the company reported 50% year-on-year (YOY) jump in net profit at Rs 80 crore for the quarter ended June 30, 2016 (Q1FY17).

Meanwhile, 584 smallcap companies excluding banks have so far announced their Q1FY17 results and have posted an average 11% YoY growth in their net profit at Rs 6,548 crore. These companies had an aggregate net profit of Rs 5,916 crore in the same quarter last year.

As regards the financial performance, most analysts feel that the worst may be getting over for India Inc and remain optimistic on the road ahead.

In its recent report authored by Ridham Desai and Sheela Rathi, Morgan Stanley expects the earnings to grow at a compounded annual growth rate (CAGR) of 16% over FY16 - 18. Till now, the earnings, it believes, were burdened by weak growth, high and rising interest costs, with excessive private sector debt and overcapitalised balance sheets, the Business Standard report suggests. CLICK HERE FOR THE REPORT

“Based on the information available for 1,180 companies, there appears to be some signs of recovery in growth in sales and profits of specific sectors. The fact that 43 sectors have witnessed positive growth in sales is encouraging. 31 of the 44 sectors had positive growth in profits. More sectors had positive growth in net sales in both quarters compared with net profits. The next 2 quarters will provide important clues on the recovery process,” CARE Rating said in a report.

Around 50 stocks include Gabriel India, Deepak Fertilisers, Banco Products, MOIL, Motilal Oswal Financial Services, India Cements, Natco Pharma and Trent  trading at their respective 52-week highs.


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