40 smallcaps give double-digit weekly returns when Sensex sees worst week in 6 months

In a week that saw BSE Sensex register its biggest weekly losses in over six months, the broader market did well as about 40 smallcap stocks gave double-digit weekly returns.

Sensex ended 0.8% down at 61337.81, but shed more than 2% in the week. This was primarily due to the hawkish stance of the US Federal Reserve on interest rate hikes, followed by a similar tone from the European Central Bank and Bank of England.

Banks topped this list as CSB Bank, Central Bank of India, Bank of Maharashtra, Suryoday Small Finance Bank, Punjab & Sind Bank, and UCO Bank rose 10-54%.

Public sector banks have had a stellar run in 2022, marking their best-ever performance in over a decade. Nifty PSU Bank index has risen nearly 80% in 2022, the highest ever in a decade.



However, money managers are not very confident in betting on the smaller and mid-sized state-owned banks eventhough many of them have undertaken a major clean-up of their balance sheets and have seen a sharp expansion in their price-to-book values.

“In terms of the PSU banks, I do not think we have looked anywhere beyond State Bank of India. There are lots of slips between the cup and lip in the case of PSUs, so we would rather avoid the smallcap and midcap PSBs,” said Dinshaw Irani, CIO of Helios Capital, to ET Now.

The other gainers in the smallcap space were GIC Housing Finance, Kalyan Jewellers, Future Lifestyle Fashion, Mahindra CIE Automotive, Mahanagar Telephone Nigam, Suzlon Energy, Themis Medicare, Orient Green Power, Andrew Yule, and National Fertilizers, that rose over 10-30% in the week gone by.


Smallcap and midcap stocks have given negative returns year-to-date (YTD), while the largecaps bucked them.

However, market experts see the broader market getting its mojo back and even outperforming in 2023 as interest rate hikes reach a peak and the macroeconomic headwinds ebb.

From a catalyst perspective, an accommodative monetary policy helps small and midcap companies more than large caps, said Krishna Sanghvi, chief investment officer - equity at Mahindra Manulife Mutual Fund.

“Going ahead in 2023, we are more towards the peak of monetary tightening, and as the policy stance changes during the year, the mid and smallcap stocks are likely to outperform the largecaps,” Sanghvi said.

(Data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)