Midcap and small cap indices have outperformed the benchmark Sensex in this fiscal so far, giving 20 per cent more returns than the blue chip stock index.
The BSE Midcap index which comprise 222 companies has given nearly 61 per cent returns so far in 2008-09 and the Small cap index, with 466 companies, gained 70 per cent so far.
The mid-cap and small-cap indices track the performance of companies with relatively smaller market capitalisation than the blue chip firms.
However, the Sensex companies, comprising 30 blue-chip firms, has given a yield of 43 per cent in the current fiscal till May 22.
In the past one week, the benchmark index Sensex touched its upper circuit limit in a historic gain of over 2,000 points giving a return of 17 per cent.
According to marketmen, the rally in the mid-cap and small-cap indices is usually seen after the blue chip stocks are oversold or touch their peak.
"Now the blue-chip companies are in consolidation phase and small and mid-cap stocks are surging because they are available at attractive valuations. Even FIIs are putting money into these stocks," a leading brokerage firm analyst said.
The 30-share Bombay Stock Exchange Sensex which was at 9,708.5 at the beginning of the current fiscal year closed at 13, 887.15 at the end of the trade on Friday May 22, 2009, giving a return of 43 per cent.
Similarly, mid-cap index which was at 2,900-level at the beginning of current fiscal year settled at around 4,700 on Friday, giving a return of 60 per cent and small-cap index hovering at around 3,200 closed above 5,500 points, yesterday, with a return of 70 per cent till May 22.
In the past week as well the mid-cap index outperformed the benchmark index giving a return of 26 per cent and small cap indices yielded 30 per cent.
Further, 30 Sensex firms, which account for over 47 per cent of the total market-cap of all the companies, saw their combined market valuation rise by over Rs 3.16 lakh crore.
Mid-cap stocks which gained during week include-- United Breweries (Holdings) 93.61 per cent, Action Construction
Equipment (83.02 per cent), IVR Prime Urban Developers (80.79 per cent) and Indiabulls Securities (79.43 per cent).
Foreign Institutional Investor (FIIs) inflows into the Indian stock markets has crossed the three-billion-dollar mark (over Rs 15,000 crore) so far this year, with as much as two billion dollar coming in just five trading sessions in the week ended May 22.
Last week, FII inflows increased significantly with net investments of Rs 4,085 crore on May 14, followed by 1,000 crore on May 18, Rs 53 crore on May 19 and again a huge Rs 5,044 crore on May 20.