The Indian stock markets have witnessed a record bull run in 2021. Not only the benchmark indices hit record highs this year, the midcap and smallcap indices too put up a stellar show during the calendar giving returns of nearly 61 per cent.
Despite the uncertainties induced by the second wave of Covid-19 in April-May earlier this year, the benchmarks have posted some record gains achieving all-time highs and the small and midcap stocks too have benefited most from this positive momentum.
From hitting the 50,000-mark in January to breaching the 62,000-level in October, the S&P BSE Sensex has had a record bull run this year. As of December 30, the BSE benchmark has surged 10,042.99 points (21.03 per cent) in 2021.
In comparison, the S&P BSE MidCap index has gained 6,689.38 points (37.28 per cent) while the S&P BSE SmallCap index has rallied 11,022.93 points (60.91 per cent).
The midcap index tracks companies with a market value that is, on an average, one-fifth of bluechips while smallcap firms are almost a tenth of that universe.
According to analysts, the record-breaking rally in the stock market has come following massive liquidity support from the global central banks, vaccination drive across the country and favourable domestic economic policies.
While Tech Mahindra (85.04 per cent), Wipro (84.88 per cent) and Bajaj Finserv (81.68 per cent) have been the top gainers on the Sensex pack, generating a year-to-date (YTD) return of over 80 per cent, the mid and smallcap indices have witnessed some heavy multibagger stocks.
A multibagger stock is one that gives a return of more than 100 per cent. In other words, these are basically those stocks that gave multiple returns than the cost at which they were acquired.
If we take a look at the S&P BSE MidCap index, there have been six multibagger stocks this year comprising of JSW Energy (349.23 per cent), IRCTC (189.77 per cent), Tata Power (188.63 per cent), MphasiS (117.25 per cent), Apollo Hospitals (106.10 per cent) and Adani Power (100.00 per cent).
In the S&P BSE SmallCap index, the top two gainers have clocked over a whopping 2,000 per cent YTD return in 2021 namely Tata Teleservices (Maharashtra) with 2,373.02 per cent and Brightcom Group (2,063.16 per cent). Apart from them, Aurum Proptech (901.94 per cent), Rattanindia Enterprises (604.44 per cent) and Ganesh Housing Corporation (565.60 per cent) are some of the other top multibagger stocks.
Speaking about the market rally in 2021, Ravi Singh, vice president and head of research at Share India Securities said, “The key factors in driving the market in 2021 were improved macro indicators, strong global liquidity, increased economic activities, significant pickup in vaccination, improvement in the consumption-related data, ease in monetary policy and sharp recovery in corporate earnings.”
On the mid and smallcap rally, Singh said, “Mid caps and small caps have majorly under-performed large caps since last three years. Being cheaper than the large caps, mid and small caps grew much faster in an economic recovery as compared to large caps.”
“As more government structural reforms in manufacturing and infrastructure are still in pipelines, we expect the stocks in mid and small cap to outpace next year also,” Singh said.