Mid Caps Outperform Strongly : Merrill Lynch
Our Corporate
Bureau
26 November 2004
In 2004, CNX Mid Cap Index (CNXMID) and Junior Nifty Index, representing 200 and 50 stocks respectively have risen 58 per cent and 38 per cent respectively in the last one year. Against this, BSE Sensex has seen a 26 per cent rise and NSE Nifty Index has gained 24 per cent.
The report forecasts (a) increased overall capex spends (60 per cent rise by 2007 to $208bn) and (b) sustained 'consumerism'. As a result, consumer discretionary stocks and companies linked to capital formation are the expected beneficiaries.
For analysing the performance of the mid cap stocks, the report focuses on two broad indices, the Nifty 'junior index' (50 stocks) and CNXMID (200 stocks), given its larger basket.
Highlights: Mid caps in India have outperformed the broader indices. For instance, CNX Midcap Index (representing 20 stocks on the NSE) has risen 58 per cent (over the last 12 months) vis-āvis a 24 per cent rise seen in Nifty and 26 per cent in the BSE Sensex.
The 200 companies in the CNXMID index have registered strong revenue and profit growth over the last five quarters — on average 64 per cent of the CNXMID companies witnessed an excess of 50 per cent growth in profits.
The report cites a number of fundamental and technical reasons for the mid cap rally.
