WINNING THE GAME OF BULLS AND BEARS

While retail investors rushed to make hay as smalland mid-cap stocks shone at the bourses, institutional investors stayed away, guided by traditional wisdom that warned them against the exuberance in the stock market. The mid-March crash, dominated by the smaller segments, proved their point

-  Harshita Dudeja

On March 13, just a week before the markets crashed, both Sensex and Nifty recorded new highs—while the former crossed the mark of 74,000 for the first time, the latter touched the milestone of 22,500. In the bull run, powered largely by smaller segment stocks, there emerged several multibaggers, or stocks that give more than 100% returns to investors. However, while retail investors made a beeline for them, institutional investors stayed away. They stood vindicated when the markets crashed as the “froth” around overvalued stocks in the smaller segments, as Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch called it, started settling and investors lost their early gains.

In the preceding months, small-cap, mid-cap, micro-cap and small and medium enterprises segments emerged as the biggest gainers. Outlook Business conducted an analysis of 3,638 BSE-listed companies for the period between third quarter of 2022–23 and third quarter of 2023–24, of which 637, including 590 from the small- and micro-cap space, emerged as multibaggers. When Sensex was up by 11,399 points—more than 18% jump—around 66% of multiplier stocks failed to garner the confidence of foreign and domestic institutional investors. Of the 637 multibaggers, 423 saw institutional investors either reducing or maintaining their stakes unchanged during the above-mentioned period.