Mumbai, Dec. 9: A tectonic shift is taking place in “B” group shares as their values in the recent past have surged ahead of “A” group shares.
Dealers said the shift in focus is a gradual process as mutual funds, foreign institutional investors and small investors have shifted their attention to the mid-cap segment. This is due to index heavyweights having gained well with little room for further appreciation.
“These are dangerous times,” a fund manager warned. Retail investors are coming in a big way after having missed most part of the rally since April.
Bombay Stock Exchange statistics reveal that while the 30-share sensex has gained 7 per cent since October 31, the much-broader BSE-500 index has clocked a double-digit growth of 12 per cent.
On October 31, the BSE-500 market capitalisation was pegged at Rs 9,40,660 crore, while that of sensex was at Rs 2,61,854 crore.
Today, the BSE-500 market cap is at Rs 10,54,041 crore, a rise of Rs 1,13,381 crore, while the sensex market cap is pegged at Rs 2,80,261 crore, a gain of a more modest Rs 18,407 crore.
“It is not clear whether investors are chasing growth or a lack of liquidity is driving these shares,” the fund manager said.
About 1,678 shares advanced today, while 377 shares declined. “Till some time ago, the bull rally of 2003 stood out from the past as only quality stocks were in the fray,” a broker said. It is now spreading to other stocks, some of which are of dubious value, he added.
Arun Kejriwal of Kejriwal Research and Investment Services, however, feels that the situation is not so serious. Many market players second him saying the market regulator’s proactive role and a quick response from stock exchanges by imposing margins will keep the markets safe.
“It is only if small investors put their money in penny stocks and other illiquid counters are they going to lose,” Kejriwal added.
A recent trend among some market favourites is to go for a stock split (splitting the face value of the share) to get more retail investors on board as high-value shares make many small investors shy away from them.
Fund managers opine that it is advisable for retail investors to invest through mutual funds instead of participating on their own.
“Many retail investors have little resources to do their own research on the companies they invest in,” he added.