Stock prices are doing all the right things on their way up. The mid-cap/small-cap rally is gaining fresh momentum with every passing day. The fifteen new stocks added to the F&O list have added another element of excitement for traders with names like Ispat, WWIL etc moving 40 per cent this week. Gains for futures traders in these stocks have been astronomical in percentage terms. The energy is infectious and it is getting passed to newer sets of stocks everyday. Santa Claus has come early this December and his bag is full of mid-cap goodies.
Erstwhile underperformers have come back in a big way. Even as stronger sets like PSU banks, power, oil, fertiliser and infrastructure consolidate gains, completely ignored mid-cap sectors like media have sprung back to life. Rank underperformers have started moving again. Mid-cap steel has been a revelation with runaway moves in names like Ispat, Mukand, Sunflag iron and Sal steel. There is no one theme which seems to be playing out. On one hand momentum is being chased in low-priced, double-digit stocks; on the other, pockets of relative value are being unlocked wherever there has been substantial underperformance. A number of new fund offerings (NFOs) also ensure assured liquidity support for this space in the weeks to come. A nice little trading party is on at this point, the mood is quite festive.
The Nifty too is not doing too badly. It seems to be quietly moving ahead to keep its date with 6,000. While the real money is being made in mid-caps, the index too has had a fairly meaningful bounce of 10 per cent from its recent low of sub 5,400. That is not too bad. Traders have to participate in this December rally, as historical patterns reveal that a lion's share of gains in small-caps actually get delivered in short bursts once or twice a year. To miss out on it altogether would be frustrating. The idea is to participate but be a bit nimble footed. This is that time of the year when tips work, whatever your broker says will go up actually does go up, so it is a good idea to play along but take profits when gains are as extraordinary as 15-20 per cent in a single session. Then try and move on to the next hot thing.
Executive Editor, CNBC-TV18