Financial Daily from THE HINDU group of publications
Wednesday, Aug 17, 2005
Markets - Stock Markets
Small-caps shine on BSE Every 8th stock hits upper circuit
Mumbai , Aug. 16
LARGE-CAP and mid-cap stocks remained flat while small-cap stocks continued their upward movement in Tuesday's trade.
A clear indication of this was seen when every eighth small-cap stock traded on BSE was locked in upper circuit with most of these stocks outside the BSE-500 index.
In upper circuit situation, there are only buyers for the stock and no sellers. In lower circuit, it is the reverse situation. In today's trading, 309 stocks on the BSE hit the upper circuit out of 2,620 stocks traded and just 29 stocks hit the lower circuit. Out of this, 302 stocks that hit the upper circuit were outside the BSE-500 index, indicating that the interest of traders have now shifted to small-cap stocks and illiquid stocks.
The exact turnover details are not known, but BSE-500 index companies contributed approximately around 85-90 per cent of the exchange's turnover.
Another indicator for interest in small-cap stock was seen from the rise in BSE Small-cap index, which rose 2.18 per cent. In comparison, BSE Mid-cap index rose 0.80 per cent; the BSE Sensex remained flat.
On the NSE, CNX Mid-cap index rose 0.43 per cent and the S&P CNX Nifty rose 0.35 per cent.
In the morning, the market opened on a positive note but soon dipped in the negative territory. After a brief recovery in its early session it witnessed a volatile movement throughout the day. But there was not any major action in stocks part of Sensex and Nifty index. The advance-decline ratio was positive both on BSE and NSE.
"Most of the small-cap stocks have low institutional interest and the rise is due to local operators active in these stocks," said Mr Ambarish Baliga, Vice-President, Karvy Stock Broking.
Stock broking firm Pioneer Intermediaries Strategist, Mr Sandeep Shenoy, said this (rise in small-cap stocks) is a risky trend. "When corpses start dancing it is better to hunt for the exit door," he said.
Mr Shenoy said in this situation investors should not go beyond BSE-200 index stocks unless it is an absolutely compelling story.
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