Uptrend Continues: 120 BSE small cap stocks yield 20% to 97% returns in July; MTNL leads gains

Small-cap stocks continue to attract investors' attention, despite many trading at elevated valuations. The majority of retail inflows have been directed towards small and mid-cap stocks in recent years, as investors are drawn to their lower market prices.

They hope for rapid gains, particularly if the companies are fundamentally strong and well-positioned within their industries. As a result, the stocks have been hitting record highs, and the trend extended into July as well.

120 constituents of the BSE Small-cap index gained between 20% and 97% in the past month, driving the index up by 6.14% to a record high of 55,332 points. This rally followed a 10.30% rise in June, contributing to a cumulative gain of 105% over the last 16 months.

Top gainers

Leading the July winners was Mahanagar Telephone Nigam, which soared by 97.1%. The stock touched a 15-year high of ₹101.80 per share, marking its biggest monthly gain since December 2021. In mid-July, the struggling state-run company received 936 million rupees ($11.21 million) from the government for interest payment as per the guarantee agreement for bonds, due to insufficient funds.

The Union Budget 2024 allocated ₹1.28 lakh crore for telecom projects and public sector firms under the telecom ministry, further boosting sentiment.

PC Jeweller also saw a significant turnaround, with July gains of 83.84%, closing the month at ₹93.87 per share. The stock rallied after lenders, including Punjab National Bank and Indian Overseas Bank, approved a one-time settlement of its outstanding dues. This surge pushed the stock to its highest level in 20 months.

Similarly, Refex Industries extended its bull run for the second consecutive month in July, delivering a return of 71%.

Refex Industries, once a penny stock, has delivered exceptional performance for long-term investors. Over the past decade, the company has shown remarkable growth, with its stock price soaring by an astonishing 21,280%, rising from ₹1.19 in June 2014 to around ₹266 currently.

Another multibagger stock, Antony Waste Handling, continued to deliver impressive returns for retail investors. In July, the stock rallied 60%, marking its largest monthly gain since its listing in December 2021.

Similarly, Sportking India, a newly listed stock, has been rewarding its shareholders handsomely. The bull run continued for the second straight month in July, with a gain of 60%.

Balu Forge Industries, listed in April 2024, gained another 58% in July following a 13% rally in June. The crankshaft manufacturer delivered a strong set of numbers for the quarter ending in June, with net profit improving by 105% YoY.

Other stellar performers in July included Protean eGov Technologies, Tips Industries, Kellton Tech Solutions, Optiemus Infracom, Artemis Medicare Services, Bhagiradha Chemicals, Black Box, Zen Technologies, Rail Vikas Nigam, IFCI, MMTC, Veranda Learning, Suraj Estate Developers, HPL Electric & Power, India Glycols, Hindustan Oil Exploration Company, Dharmaj Crop Guard, Deepak Fertilisers & Petrochemicals Corporation, and Pearl Global Industries. These companies ended the month with gains ranging between 36% and 59%.

Large-cap stocks maintain strength

The Nifty 50 ended July with a 4% gain, reaching 24,951 points and extending its winning streak for the second consecutive month. On July 29, the index nearly touched the 25,000 mark, falling just 0.25 points short. So far in CY24, the Nifty 50 has set record highs on 49 occasions.

Similarly, the S&P BSE Sensex saw a 3.43% increase in July, continuing its winning streak for the second month in a row. On July 30, the cumulative market capitalisation of BSE-listed companies surged to an all-time high of ₹460 lakh crore, or $5.5 trillion.

In terms of sectoral performance, the Nifty IT index concluded the month with an impressive 13% gain, ending at a record high of 40,851 points. Over the last two months, the index has gained 26%.

Additionally, the Nifty FMCG and Nifty Auto indices recorded notable gains of 9.38% and 6%, respectively, by the end of July. The Nifty Pharma index also closed the month with a significant 10.50% increase, marking its largest monthly gain since November.