Time to Buy Smallcaps?

Apr 30, 2021

Brijesh Bhatia, Research analyst

On 17 February, I recorded a video on smallcaps. I said, smallcaps would outperform the Nifty.

That call turned out to be correct.

But what about now? Will smallcaps continue to outperform?

I believe so. In this video, I'll show you why I think it's a good to buy smallcaps and why the upside could be huge.

Hello viewers. Welcome to the Fast Profits Daily video series. Myself Brijesh Bhatia. In this video we will be discussing about the smallcap index and how it has performed against the Nifty.

So if you haven't watched our 17th February video, in which we have discussed about Nifty and a smallcap indices, how it's been performing, since then we have been recommended that smallcap index this time is to outperform against the Nifty and similarly it happened.

 

So look at the chart over here first. This is the ratio chart of smallcap divided by Nifty. Which means we have divided smallcap index price by Nifty price and if you look at the structure over here, the prices have broken out of bullish head and shoulder, which is the bottoming formation.

Get Details: We are Bullish on These 3 Little-known Stocks

A similar structure when it broke out in February, we have discussed at that video. In case you haven't watched it, we request you, do watch it and how it has performed since then.

So if you look at since February the breakout was there. The smallcap index strongly outperformed against the Nifty.

Since 2018, April 2018, this is the first time that it has crossed 200 weekly exponential moving average, which means that the long term average, the long-term moving average, 200 weekly, has been taken out of this ratio, which means that the smallcap still has a huge room to outperform against the Nifty. So the structure still remains bullish smallcaps could outperform against the Nifty.

 

If we look at the smallcap chart over here, I would like to highlight this time cycle. Since it made its high during the September, from the September highs to the lows it consolidated for around 58 days.

Similarly, for just look at the February 2021 highs till now, we are around 55 days now. Probably we are expecting that soon, the price could break out with the new highs. Again, we are looking at the history repeating itself as per the time cycle performance.

Now, if you look at the third chart from the March 2020 low to the September 2020 high, where it has been a huge rally, it took around 177 days. So precisely, if I look at the Fibonacci time, 178 is the fib number. So it nearly took the fib time from the March to September. Then it went into the consolidation for around 58 days.

Similarly, if I just look at the lows over here from the September lows to the February 2021 high, it took around 162 days again that is the fib number, the golden ratio where we say the 161.8 is the golden ratio. It took around 162 days.

So again, if you look at March to September 177 days again, again a fib number. September 2020 to February 2021, 162 days. Again a fib number.

So rallies around the fib number, consolidations are around 58 days. So we are into 55 days now, probably next week, we might see smallcap railing. The fresh momentum could start for another probably 150-160 days.

So you should keep a watch on smallcaps. We still think that smallcap has a huge potential of outperforming the Nifty, which is clearly seen from the 200 weekly moving averages as well. So that's all. We should not miss the opportunity investing it smallcaps. We still believe that there's a huge potential coming up.

Warm regards,

Brijesh Bhatia
Brijesh Bhatia
Research Analyst, Fast Profit Report
Equitymaster Agora Research Private Limited (Research Analyst)

Recent Articles

Why I'm Bullish on PSU Stocks May 18, 2021
PSU stocks are buzzing and I'll show you why.
Auto Stocks Are Looking Bullish May 17, 2021
Is it time to buy auto stocks?
Die Hard 4.0 Redux? May 14, 2021
A Hollywood style cyber-attack has caused shockwaves across financial markets.
Is Intraday Trading For You? May 13, 2021
Do you think you have what it takes to be an intraday trader? Find out in this video.

Equitymaster requests your view! Post a comment on "Time to Buy Smallcaps?". Click here!

2 Responses to "Time to Buy Smallcaps?"

Nitin Mehta

May 1, 2021

Mr Brijesh,

Kudos.

I have seen your past videos and analysed as well.

You are on dot, precise and mastered the art.

1. Your prediction of FMCG stock rally - HUL / Britannia

2. Your latest Financials / NBFC - HDFC twins / Bajaj twins / Axis / ICICI bank

3. Metals story

All these panned out well.


Taking your today's prediction video ahead, I would like to share my point of view. If Ms Richa [Hidden Treasure / Small cap incharge] and yourself upper prediction can be amalgamated and a Special update is release by Ms Richa as to HOLD of past recommendation, I shall be greatful.

My personal investment in Small caps has gone for a toss as I invested in those recommendation which currently trade @ 10% to 40% of purchase price [i am not naming scrip now].
In anxiety, when rally started I sold a few @ cost after holding for 4/5 years and now those are trading 50% higher like cosmos Films.

Summing up, after holding for 4/5 years, if holding further for next 6 months if appreciation is being met based on your above view; I shall be really grateful.
I understand there may be many investors like me who have invested their money and got stuck or booked loss.

If need be, I can share list of scrips separately, once I get a life support mail from the team.

Thanks,

Nitin Mehta
























Like 

Hanuman ram

Apr 30, 2021

Happy enivarsari

Like (1)
  
Equitymaster requests your view! Post a comment on "Time to Buy Smallcaps?". Click here!