Smallcaps’ resilient show in April has 500 stocks offering double-digit returns. How to navigate May

Within the smallcap space, over 500 stocks have delivered double-digit returns with the highest gain (Puravankara) going as high as 86%. It is closely followed by Dolat Algotech, Waree Renewable Technologies and Tejas Networks — whose shares have rallied over 70% in the last one month.

Nearly 13 smallcap stocks, including Moschip Technologies, Manorama Industries, Sanmit Infra, Abans Holdings, Yuken India, Indraprastha Medical Corp, Aegis Logistics, Gallantt Ispat, have rallied between 50-70%.

In the midcap space, around 52 stocks have offered double-digit returns with Exide Industries being the top gainer at 55%. , , IREDA, and Schaeffler India have all risen over 30% gains during the reporting month.

From the Sensex pack, banks have dominated the gains with Axis Bank and SBI occupying two spots out of top three. Mahindra and Mahindra was the lead gainer in the benchmark index with a gain of 12%.

Sectorally, metals had seen a strong rally during the month by surging over 10%. The public sector enterprise (PSE) stocks have also had a decent run as the index jumped 10.5% in March.

What to expect in May?

Even though there is stability in largecaps, which are doing well currently, analysts said euphoria is building up in the run-up to the general election as the market is discounting a Modi victory.

"Post the elections, I do not think the market would have a lot of steam left to rally further because an NDA victory would be one of the greatest news for the market to shoot up significantly. So, one can play tactically right now and be bullish on the market," said Aditya Arora, Adlytick.

"I think the market is also pricing in rate cuts, which is a positive which could create a significant short-term, medium-term top for the market," Arora added.

Within the broader market, if investors have to allocate money, Harendra Kumar of Elara Securities is looking to find opportunities in the midcap space.

"Midcaps more than the have a longer runway in a bull market and historically, we have seen they tend to outperform largecaps. So, yes, a large part of your allocation should be in midcaps. And I think what technology and capital is giving the ability for the companies to morph much more faster," he said.

Sectorally, analysts see metals having more steam left in the rally despite a strong outperformance in the last couple of months.

"Metals are taking a breather now, but I believe there is much more room on the upside in the metal space as well. JSW Steel, Steel Authority of India, Hindalco look attractive," said Aditya Agarwala of Invest4edu.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)