With no backing of big bulls, 14 smallcap stocks turn multibaggers in 6 months; time to worry?

Over the last six months, atleast 14 stocks in the BSE universe gave multibagger returns, and interestingly, these are stocks where both foreign institutional investors and mutual funds had nil holdings during the same period.

The analysis by ETMarkets took into account only those stocks with a market capitalization of over Rs 1,000 crore.

, Piccadily Agro Technologies, , , Panorama Studios, MSP Steel & Power, and are among the 14 stocks that gave multibagger returns over the last six months.

Waaree Renewable Tech shares rallied more than 500% in the last six months, and much of this came after group company Waaree Energies filed papers for an initial public offering of shares worth more than Rs 1,300 crore via fresh issue.

Electrical equipment maker Indo Tech Transformers has surged more than 132% in the last six months. This is another stock where both FII and MFs had no holdings in the last two quarters.

Steel producer MSP Steel & Power is another smallcap stock that gave 150% returns in the last six months, backed by strong buying by retail investors as institutional bulls stayed away.

Fibre optic cable manufacturer was one of the best performing smallcap stocks, giving returns of over 240% returns in the last six months eventhough there was no buying by institutional investors.

Panorama Studios International has given stellar returns of 319% in the last six months despite zero holdings by both foreign investors and mutual funds.

The other smallcap stock in this list is Cropster Agro Ltd, which has rallied a whopping 262% in the last six months despite zero ownership of foreign investors and mutual funds.

Note that promoters holding most of these stocks have remained steady in the last one year.

What should investors do?

While retail bulls are showing no signs of fatigue, market regulator SEBI has raised concerns over the non-stop rally in smallcap stocks and has taken measures to check the same.

Over the last one week, several stocks in this space have seen a sharp correction following SEBI’s warning.

However, analysts are not hitting alarm bells since they do see some value in quality stocks and believes that one should stay invested while not going overboard.

“If we look from a macro perspective, if a country has to grow intrinsically strong, it cannot be superficial, it has to go deep…Regulators and government are bringing in policies to strengthen smaller companies, putting in place the governance system, encouraging financial literacy which is leading to value creation in small and mid-cap companies,” said Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics.

All these measures will help attract more retail investors who are now better equipped with information and research. So, value investment in small and mid-cap will continue to happen, Kumar said.

(Data inputs from Ritesh Presswala)

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