Indian smallcap stocks have been delivering big alpha to investors year after year. Calendar 2017 was no different; as over 150 stocks from the BSE Smallcap index more than doubled investor wealth since January this year.
The index soared nearly 50 per cent on a year-to-date basis, with HEG and Indiabulls Ventures surging over 1,000 per cent each.
Graphite India, Bhansali Enginnering, Bombay Dyeing, Avanti Feeds and V2 Retail climbed between 300 per cent and 850 per cent during the same period.
While past performance cannot guarantee future returns in stocks, analysts say many of these stocks hold potential to deliver big gain in 2018 too!
Before we tell you the names, here is a disclaimer: investors should consult their financial advisers before betting on such stocks for the New Year.
Smallcaps that figure prominently in the yearend recommendations of various brokerages include interesting names.
Sahil Kapoor, Chief Market Strategist, Edelweiss Investment Research, says Jamna Auto and GNA Axles can deliver an excellent returns in 2018. Shares of Jamna Auto have soared 101 per cent to trade at Rs 69.80 on December 15 compared with Rs 34.67 it quoted at on January 2.
GNA Axles advanced 112 per cent to Rs 388.65 from Rs 183.30 during the same period.
Smallcap czar Porinju Veliyath says retail investors who invest directly in the market should look at midcap and smallcap companies that are on a turnaround path, specifically after the hit from demonetisationand GST rollout. Many companies, which were not professionally managed earlier, are embracing professionalism and that is where minority shareholders will have an opportunity to make money.
Siddharth Khemka, Head of Retail Research at MOSL, expects the benchmark indices to deliver around 15-20 per cent return in 2018. He says Repco Home Finance and KNR Constructions can give decent returns to investors over the next 12 months.
Shares of KNR Consturction have surged 58 per cent, while Repco Home Finance have advanced 15 per cent in 2017 till December 15.
There are expectations that broadbased earnings recovery, benign interest rates and continuity of domestic inflows will give further direction to market.
Technical analyst Sumeet Bagadia of Choice Broking is bullish on SP Apparels and KCP.
“We are expecting an upside movement in SP Apparels up to Rs 475-558 while downside support comes in at Rs 360. KCP can touch the Rs 150-178.85 levels on the higher side, while downside support comes in at Rs 105,” said Bagadia.
Despite a bullish outlook for the broader market, 165 stocks in the BSE Smallcap index failed to deliver positive returns to investors while some of them burnt nearly 95 per cent of investor wealth in last 12 months.
These included TV Vision and Sri Adhikari Brothers that tumbled 95 per cent each between January 2 and December 15. Shares of Videocon Industries, Lanco Infratech, JMT Auto and Nitin Fire Protection have fallen 85 per cent, 75 per cent, 74 per cent and 73 per cent, respectively, on a year-to date basis.
Smallcap and midcap stocks will continue to be outperformers going forward, says AK Prabhakar, Head of Research, IDBI Capital Markets. Smallcaps including NRB Bearing, Finolex Cables, Deepak Nitrite, Deepak Fertilisers and Sterlite Technologies can surge 100 per cent in next 12-18 months, he said.