Midcaps, small-caps joining the market rally

The mid-cap and small-cap stocks that have missed the current rally may be joining in the party.

The broader market also showed a strong momentum on Thursday as both the mid-cap and small-cap indices advanced 0.76% and 0.31%, respectively.

"Participation in the market is broad-based now. First, it started with large-cap stocks and few heavyweight, but now investors are participating in the mid-cap and small-cap indices too from the last two to three sessions," said Rahul Shah, vice-president, equity advisory group at Motilal Oswal Securities said.

This is happening due to in-line and expected earnings results and also various economic factors, he said, adding the foreign portfolio investors have again started putting money and rupee is also recovering.

"These are the factors helping the indices to rise. In the near-term things look better unless some major disappointment in the global market takes place,"

Sector-wise, BSE Utilities (1.66%) soared the most, followed by Power (1.44%), Bankex (1.43%), Finance (1.29%) and Realty (0.73%). On NSE, Nifty PSU Banks was the highest gainer surging 5.45%. Nifty Financial Services, Bank and Private Bank rose as much as 1.67%.

"Individual sectors have been performing well. The earnings numbers are hugely affecting the market and they are taking cues from there. We remain positive with our outlook, but going forward, in the next week or first week of August, we can expect some correction happening. The faith of the mid-cap and small-cap stocks will be based on the earnings number totally," Vikas Jain, senior research analyst at Reliance Securities said.

Domestic institutional investors on Thursday sold shares worth Rs 2,716.04 crore while the FPIs bought shares worth Rs 2,453.57 crore on a net basis, according to the provisional data.

State Bank of India (SBI) was the biggest contributor in the Sensex pack, rising 5.62%, followed by ICICI Bank (4.08%), Power Grid (4.04%), ONGC (1.98%) and Axis Bank (1.84%). On Nifty, 26 out of 50 stocks advanced with SBI, Eicher Motors, Power Grid, Grasim and ICICI Bank taking the pole position and rising as much as 6.40%.

"Investors should remain in large-cap stocks with low or no debt, cash flow-positive companies, or invest through SIPs in ETFs or select mutual funds," Dhiraj Relli, managing director and CEO of HDFC Securities wrote on a note.

Globally, Asian markets ended mixed and European shares rose after the US President Donald Trump and European Commission chief Jean-Claude Juncker agreed to work towards easing trade tensions. In Asia, Singapore inched up 0.05%, Taiwan rose 0.41%, while Hong Kong's Hang Seng dipped 0.48%, Shanghai Composite Index shed 0.71% and Japan's Nikkei fell 0.12%. Among European markets, Frankfurt's DAX soared 1.18% and Paris CAC 40 was up 0.41% in the early sessions.