Small Cap Stocks Earn Big Profits for Investors in 2023, Index Gains 25%

Small Cap Stocks in 2023: The year 2023 has seen a historic rise in the Indian stock market. But market investors have made the most money by investing in small cap stocks. Small cap stocks have been the first choice of investors. 2023 has proved to be very beneficial for the equity market due to improved economic condition of the country and excellent participation of retail investors. In mutual funds also more and more investments have been made in small cap funds.

As of December 22, 2023, the BSE Small Cap Index has gained 13,074.96 points or 45.20 percent, while the Mid Cap Index has gained 10,568.18 points or 41.74 percent. While against the small-cap and mid-cap indices, the BSE’s 30-share Sensex gained 10,266.22 points or 16.87 per cent. On December 20, 2023, the Small Cap Index touched its all-time high of 42,648.86 points and the Mid-Cap Index also touched a record high of 36,483.16 points on the same day. The BSE Sensex had touched an all-time high of 71,913.07 points on December 20.

The mid-cap index includes companies with a market value of about a fifth of the ‘blue-chip’ companies with higher share prices, while small-cap companies have about a tenth of that. Market experts believe that the equity market growth in 2023 is attributed to improved domestic economic fundamentals and retail investor confidence.

Mukesh Kochhar, National Head (Wealth), AUM Capital said, “When the overall economy is strong, small-cap and mid-cap stocks perform better. Kochhar calls 2023 a big year for the equity market. “We have seen new highs with massive participation,” he said. Market experts believe that after a strong rally in 2023, profit booking may be seen in small-cap stocks in the near term.

On March 28, 2023, the small-cap and mid-cap indices hit their 52-week lows. The BSE small-cap index touched a one-year low of 26,120.32 points on March 28, while the mid-cap index touched a 52-week low of 23,356 points on the same day. On March 20 this year, the BSE Sensex index had hit a one-year low of 57,084.91 points. Investors faced a range of negative news from turmoil at major global banks to macroeconomic concerns. However, the market has made a strong comeback in the months of November and December. Experts believe that smaller stocks are generally bought by local investors while foreign investors tend to focus on ‘blue chip’ or larger companies.

Palka Arora Chopra, director of Master Capital Services Ltd, said the main reasons for the market’s growth this year were increased participation by retail investors, higher-than-expected GDP growth of 7.6 percent in the September quarter and investor interest rates. Reductions are included. US Federal Reserve. Expectation is included. Political stability due to the return of the Modi government after the 2024 Lok Sabha elections and increased foreign fund inflows into the equity market in 2023 have also weighed on the market.

So far in the year 2023, foreign portfolio investors have invested a total of over Rs 1.62 lakh crore in India. In December 2023 alone, FPI investments in equity markets have exceeded Rs 57,300 crore.

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