Did small caps beat the street in October 2024?

14 Nov 2024 , 11:33 AM

SMALL CAPS PUT UP A BRAVE FACE IN OCTOBER 2024

To be fair, small caps did better than the Nifty Mid-cap and the Nifty 50. Both these indices fell about 6-7%; while the Nifty Small Cap 100 fell just about 3.77%. One reason could be that the selling was largely driven by global institutions in October with FPIs selling nearly $13.5 Billion worth of equities in the secondary markets. However, domestic mutual funds and individual investors continued to be net buyers in equities. That explains why the demand for small cap stocks was still robust in the month of October 2024. Also, most of the small cap companies are very niche players and are not too vulnerable to global macros. This also worked in their favour. Above all, the small caps had already corrected sharply in the last few months and hence were relatively attractive in valuation terms.

HOW DID THE SMALL CAP STOCKS FARE IN OCTOBER 2024

After being under pressure in the last quarter, the small caps at -3.77% in October 2024; actually, did better than the large caps and the mid-caps Here is a quick dekko.

• For October 2024, Nifty Small cap 100 fell -3.77%. Out of the 93 small-caps with full data, 7 companies generated over 10% in October and 15 companies gave over 5%. Only 27 out of 93 companies gave positive returns, with the rest seeing erosion in value.
• For the year to October 2024, Nifty Small cap 100 gained 47.16%. Out of the 93 small caps with full data, 17 companies generated over 100% returns, and 40 companies over 50%. Total of 74 out of 93 companies gave positive returns in year to October 2024.
• What about resilience? Nifty Small cap 100 bounced 44.12% from the lows. Out of the 93 small-caps with full data, 24 companies bounced over 100%, and 50 bounced over 50%. Total of 10 companies bounced less than 10% from lows.
• What about swing, or proximity to high price. The index overall had a swing factor of 5.28%. A total of 14 out of 93 companies are less than 10% from the peaks.

Let us look at small cap stocks from the perspective of momentum?

DID SMALL CAPS SHOW MOMENTUM RETURNS IN OCTOBER 2024

In terms of 1-month returns, the Nifty Small cap 100 contracted by -3.77%. Out of the 93 eligible stocks in the index, only 27 stocks gave positive returns. Here are the top-15.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
AMBER	6,030.00	24.65%	106.90%	7,159.00	2,876.00	109.67%	15.77%
ANGELONE	3,060.15	17.36%	16.05%	3,896.00	2,025.00	51.12%	21.45%
PPLPHARMA	267.40	17.33%	151.85%	274.74	95.10	181.18%	2.67%
RADICO	2,379.00	14.47%	94.46%	2,524.00	1,207.95	96.95%	5.74%
TEJASNET	1,344.80	13.38%	58.41%	1,495.00	651.25	106.50%	10.05%
MCX	6,509.00	11.79%	172.88%	6,870.00	2,276.40	185.93%	5.25%
BEML	4,062.00	10.85%	102.52%	5,488.00	2,001.55	102.94%	25.98%
FSL	341.00	8.93%	118.22%	378.00	154.20	121.14%	9.79%
CDSL	1,546.25	7.60%	2.93%	1,664.40	687.53	124.90%	7.10%
360ONE	1,085.25	7.54%	105.97%	1,215.00	518.10	109.47%	10.68%
GESHIP	1,290.00	7.35%	61.46%	1,543.70	727.50	77.32%	16.43%
ASTERDM	443.90	6.53%	34.75%	558.00	311.10	42.69%	20.45%
BLS	399.75	6.11%	55.56%	474.40	254.70	56.95%	15.74%
KARURVYSYA	225.21	5.51%	52.79%	232.75	142.10	58.49%	3.24%
DATAPATTNS	2,415.25	5.11%	30.46%	3,655.00	1,751.00	37.94%	33.92%

Data Source: NSE

For October 2024, 7 stocks gave double digit returns (Amber Enterprises, Angel One, Piramal Pharma, Radico Khaitan, Tejas Networks, MCX, and BEML). In terms of sectoral mix; the top-15 had 5 BFSI stocks and 3 defence plays. The worst performers in October 2024 in terms of 1 year returns included Chennai Petro, MGL, Intellect Design, Manappuram, HFCL, and Credit Access.

DID SMALL CAPS DELIVER ON 1-YEAR RETURNS?

Out of 93 small cap stocks, 17 stocks more than doubled yoy, while 40 stocks gave over 50% returns. A total of 19 stocks gave negative returns yoy. Here is the top-15 on 1-year returns.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
MCX	6,509.00	11.79%	172.88%	6,870.00	2,276.40	185.93%	5.25%
IFCI	57.70	-11.27%	166.79%	91.40	21.55	167.75%	36.87%
PPLPHARMA	267.40	17.33%	151.85%	274.74	95.10	181.18%	2.67%
NATIONALUM	227.95	1.38%	147.76%	235.37	89.25	155.41%	3.15%
SIGNATURE	1,365.10	-15.48%	135.43%	1,647.00	565.00	141.61%	17.12%
KAYNES	5,461.00	-0.48%	133.33%	5,909.95	2,158.00	153.06%	7.60%
GLENMARK	1,698.80	1.66%	127.12%	1,830.95	722.10	135.26%	7.22%
ARE&M	1,390.00	-1.51%	125.05%	1,775.95	609.00	128.24%	21.73%
CESC	189.00	-5.86%	124.96%	212.49	83.60	126.08%	11.05%
GRSE	1,614.00	-5.48%	119.63%	2,833.80	673.45	139.66%	43.04%
FSL	341.00	8.93%	118.22%	378.00	154.20	121.14%	9.79%
NCC	298.05	-1.82%	111.69%	364.50	140.55	112.06%	18.23%
HINDCOPPER	293.85	-15.73%	108.95%	415.80	140.15	109.67%	29.33%
AMBER	6,030.00	24.65%	106.90%	7,159.00	2,876.00	109.67%	15.77%
360ONE	1,085.25	7.54%	105.97%	1,215.00	518.10	109.47%	10.68%

Data Source: NSE

On a yoy basis, the list was dominated by 4 PSUs (IFCI, NALCO, Garden Reach Shipbuilders, and Hindustan Copper). The remaining stocks in the above list, were largely spread out across sectors including financial inclusion, healthcare, microchips, green energy, outsourcing etc. The list at the bottom included names like Zee, Sonata, Credit Access RITES, RBL Bank, Tanla, ITI Ltd, and Bata India.

HOW RESILIENT WERE SMALL CAPS IN LAST ONE YEAR?

In terms of bounce from the lows, the small caps overall bounced 44.12%. Total of 24 stocks more than doubled, and 49 jumped over 50% from the lows. Top-20 average bounce was 145.10%.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
INOXWIND	223.30	-6.47%	5.87%	261.90	51.90	330.25%	14.74%
MCX	6,509.00	11.79%	172.88%	6,870.00	2,276.40	185.93%	5.25%
PPLPHARMA	267.40	17.33%	151.85%	274.74	95.10	181.18%	2.67%
IFCI	57.70	-11.27%	166.79%	91.40	21.55	167.75%	36.87%
NATIONALUM	227.95	1.38%	147.76%	235.37	89.25	155.41%	3.15%
KAYNES	5,461.00	-0.48%	133.33%	5,909.95	2,158.00	153.06%	7.60%
SIGNATURE	1,365.10	-15.48%	135.43%	1,647.00	565.00	141.61%	17.12%
GRSE	1,614.00	-5.48%	119.63%	2,833.80	673.45	139.66%	43.04%
GLENMARK	1,698.80	1.66%	127.12%	1,830.95	722.10	135.26%	7.22%
BLUESTARCO	1,871.00	-10.73%	100.26%	2,199.55	814.00	129.85%	14.94%
NBCC	97.20	-46.06%	47.37%	139.83	42.53	128.54%	30.49%
ARE&M	1,390.00	-1.51%	125.05%	1,775.95	609.00	128.24%	21.73%
CESC	189.00	-5.86%	124.96%	212.49	83.60	126.08%	11.05%
CDSL	1,546.25	7.60%	2.93%	1,664.40	687.53	124.90%	7.10%
FSL	341.00	8.93%	118.22%	378.00	154.20	121.14%	9.79%

Data Source: NSE

On resilience score, the list was dominated by 4 PSUs (IFCI, NALCO, GRSE, and NBCC). Financial inclusion continues to be well represented in the small cap leaders. The remaining stocks in the above list, were largely spread out and similar to the 1-year return rankings list. The list at the bottom included stocks like; Birlasoft, Happiest Minds, Tanla, Zee, RBL Bank, Bata, Credit Access, ITI, Trident, and Raymond. It was largely about IT and financials, although Raymond figured in the list only due to the hive-off.

HOW SMALL CAPS FARED ON THE SWING FACTOR?

In terms of proximity to the peak, the index was just 5.28% short of the peak. Total of 14 stocks are less than 10% to the peak while 26 stocks are over 30% from the peak levels.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
PPLPHARMA	267.40	17.33%	151.85%	274.74	95.10	181.18%	2.67%
NATIONALUM	227.95	1.38%	147.76%	235.37	89.25	155.41%	3.15%
KARURVYSYA	225.21	5.51%	52.79%	232.75	142.10	58.49%	3.24%
ATUL	7,877.95	-2.01%	27.79%	8,180.00	5,174.85	52.24%	3.69%
LAURUSLABS	491.00	4.68%	36.88%	518.00	356.65	37.67%	5.21%
MCX	6,509.00	11.79%	172.88%	6,870.00	2,276.40	185.93%	5.25%
RADICO	2,379.00	14.47%	94.46%	2,524.00	1,207.95	96.95%	5.74%
CDSL	1,546.25	7.60%	2.93%	1,664.40	687.53	124.90%	7.10%
KEC	991.00	-6.27%	58.48%	1,068.00	550.05	80.17%	7.21%
GLENMARK	1,698.80	1.66%	127.12%	1,830.95	722.10	135.26%	7.22%
PEL	1,060.10	-3.82%	9.77%	1,143.80	736.60	43.92%	7.32%
KAYNES	5,461.00	-0.48%	133.33%	5,909.95	2,158.00	153.06%	7.60%
APARINDS	10,020.00	4.04%	99.09%	11,000.00	5,011.00	99.96%	8.91%
FSL	341.00	8.93%	118.22%	378.00	154.20	121.14%	9.79%
TEJASNET	1,344.80	13.38%	58.41%	1,495.00	651.25	106.50%	10.05%

Data Source: NSE

In terms of proximity to the peak, the list is dominated by Healthcare (Piramal Parma, Laurus Labs, Glenmark) and financial inclusion (Karur Vysya, MCX, CDSL). Companies farthest from the peak were largely financials, PSUs, and IT stocks. Most of these sectors struggled to get back to their previous highs, due to persistent selling at higher levels.

Let us sum up the small cap story for October 2024. While small caps were under pressure, they have surely done better than the mid-caps and largely in the month of October. Whether they are able to contribute to alpha hunting in the coming months; is something that remains to be seen.