BSE Smallcap index up for 5th straight day; Bodal Chemicals gains 13%

Shares of smallcap companies were in limelight on Tuesday with the S&P BSE Smallcap index trading higher for the fifth straight session on the BSE. At 01:26 pm, the smallcap index, up 0.46 per cent at 13,710 points, was the largest gainer among broader indices. In past five trading days, the smallcap index outperformed the market by gaining 2.5 per cent on the back of a strong rally in beaten down sector stocks like chemicals, auto ancillaries, sugar, media and credit rating agencies.

In comparison, the S&P BSE Midcap index was up 1.2 per cent, while the benchmark S&P BSE Sensex was down 0.5 per cent during the same period.

However, despite the benchmark Sensex trading close to its record high level, the smallcap index is still down 10 per cent from its 52-week high level of 15,330 on April 1, 2019. It touched an all-time high of 20,183 on January 15, 2018.

Market analysts are expecting a recovery in earnings in the second half of 2020 on the back of a low base, positive global sentiments, and economic reforms that are being taken by governments. The overall sentiment in the market is likely to improve in 2020 where midcap and smallcap space may start to outperform once the earning visibility is there.

“A modest recovery in growth is expected into H2FY20 on a more favorable base effect, an above normal south west monsoon (10 per cent higher than average), government spending coming back after the national elections and into the busy season, lagged impact of monetary easing,” analysts at JP Morgan said in a note.

A more robust recovery is, however, likely to take time given limited policy levers, particularly in terms of fiscal space, the brokerage firm said.

Bodal Chemicals, Sunflag Iron & Steel, Bhansali Engineering Polymers, Rane (Madras), CARE Ratings, and Rane Brake Lining have rallied more than 30 per cent in the past week.

Dwarikesh Sugar, Dalmia Bharat, Dhampur Sugar, Avadh Sugar, Triveni Engineering & Industries, and Shree Renuka Sugars from the sugar sector were up in the range of 9 per cent to 19 per cent during the week.

“India sugar production is down 35 per cent year on year (YoY) at 4.58 mn tonne as on 15 December. This drop in production is primarily due to a sharp decline in sugar production in Maharashtra and Karnataka,” industry body Indian Sugar Mills Association (ISMA) said in its latest press release.

“Lower cane crushing, and, subsequent decline in sugar production, augers well for the domestic sugar industry. With regards to exports, millers have signed contracts for about 2.0mn tonne of sugar to date and another 3.0mn tonne are likely in the upcoming months. Thus, lower cane production, higher diversion to ethanol and a pickup in exports should lead to lower inventory levels in India by the end of the season,” analysts at Elara Capital said in sugar sector update.

COMPANY LATEST 1-WEEK BEFORE GAIN(%)

BODAL CHEMICALS 74.20 55.25 34.3

SUNFLAG IRON 38.70 29.00 33.5

BHANSALI ENGG. 53.65 40.80 31.5

CARE RATINGS 644.00 490.20 31.4

RANE (MADRAS) 345.00 264.45 30.5

RANE BRAKE LIN. 743.25 571.00 30.2

I G PETROCHEMS 169.10 130.80 29.3

GATEWAY DISTR. 122.50 95.75 27.9

BHAGERIA INDUST. 119.25 96.95 23.0

TEJAS NETWORKS 95.50 78.00 22.4

KRIDHAN INFRA 3.00 2.48 21.0

ZUARI GLOBAL 50.05 41.50 20.6

DEN NETWORKS 48.45 40.20 20.5

CAMLIN FINE 84.10 70.15 19.9

SPICEJET 112.90 94.80 19.1

JP POWER VEN. 1.64 1.38 18.8

ANDHRA PETROCHEM 36.00 30.45 18.2

DWARIKESH SUGAR 32.20 27.25 18.2

ITD CEM 55.30 46.80 18.2

INFIBEAM AVENUES 55.05 46.60 18.1