The rally in midcap stocks on India's premier bourses hit a new peak on Friday, with the NSE CNX midcap index closing at a record 11,916.3, and the BSE midcap index regaining the 10,000 mark after more than six years.
The broader market was almost flat, with the BSE Sensex closing at 27,061.04, a rise of 65 points, and the NSE Nifty at 8,105.50, up 19.80 points up. The Sensex had lost over 300 points in the last three trading sessions, mainly on worries over early rate hikes by the US Fed, among others.
The BSE midcap index hit 10,019 during intra-day trade before slipping slightly to close at 9983.08. It hit its record high of 10,246 during intra-day trade on January 8, 2008.
The NSE CNX midcap, which comprises over 13% of the stocks traded on the exchange, hit an intra-day high of 11,924.1 as investor sentiment ruled high across sectors. Midcap indices have been on an upward trend this month, with the BSE and NSE midcaps gaining 5.7% and 5.1% respectively so far in September, outperforming the Sensex and Nifty, which are up 0.72% and 0.97%.
Top gainers on Friday included Amara Raja Batteries, Gujarat Pipapav Port Ltd and Gujarat State Fertilisers and Chemicals.
"Sentiments alone cannot sustain a rally," cautioned Sanjeev Zarbade, vice-president, private client group research at Kotak Securities. "Many midcap stocks are trading at a discount to their true value, but in the long term, there will be a weeding out of true value companies. There are many companies that you would not buy on their current balance-sheet, but investors chasing high returns and undiscovered ideas are betting on turnarounds.
"We are seeing buyers coming at decline," said Jagannadham Thunuguntla, head of research at SMC Global Securities Ltd. "This is the perfect demonstration of a bull market. However, investors need to be cautious as there could be mistakes in euphoria."