BackBSE SME IPO index stages a remarkable recovery to scale new highs in April
The BSE SME IPO index's strong performance in April comes after a volatile start to the year
PremiumMUMBAI:The BSE SME IPO index scaled a record high of 65,148.53 points on Tuesday, lifting its market capitalization to ₹1.55 trillion and marking a significant resurgence from the slump witnessed in March.
The BSE SME IPO index had plunged 11.2% after Madhabi Puri Buch, chairperson of the Securities and Exchange Board of India, raised concerns regarding the stretched valuations of smallcap and midcap stocks.
Market experts warned that investors should not get caught up in the exuberance of the stock market.
“Considering high volatility, investors should book profits at regular intervals and ensure that they are not caught up in the valuation froth," said Divam Sharma, founder and fund manager at Green Portfolio.
Also read: A blip, not a trend: Smallcaps remain the flavour despite recent shift
Bondada Engineering Ltd was the biggest contributor to the latest rally in the BSE SME IPO index, accounting for an impressive 22.8% of the rise so far this year.
Other significant contributors include KP Green Engineering (12.4%), Insolation Energy (8%), Meson Valves India (7.5%), Cosmic Crf (5.6%),CFF Fluid Control (5.3%) Khazanchi Jewellers (5%), PNGS Gargi Fashion Jewellery (4.9%), Amic Forging (4.8%), and Veefin Solutions Ltd (4.2%).
“SME index has overall done exceptionally well with companies being able to raise money and some interesting business models coming in with listings and attracting capital," said Sharma.
“We see investment opportunities in the space but the investors have to be very specific and choosy," he cautioned. "Company fundamentals, business models, corporate governance, etc., have to be carefully evaluated."
The BSE SME IPO index's strong performance in April comes after a volatile start to the year. In March, the index had fallen from 59,395.21 points to 52,725.41.
It has, however, staged a remarkable recovery in April, surging 19% and reaching an all-time high, suggesting that investor confidence in the SME sector is returning.
On Tuesday, the wider benchmark Sensex index closed at 73,738.44, up 89.82 points.
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