Free Report: The 2020 Smallcap Guide

Make the Most of the Smallcap Rebound with These Stocks

Dec 3, 2019

Richa Agarwal, Research analyst

The bad news has been pouring in.

The auto sales data is out for the month of November. And it's been bad enough to make auto stocks tumble.

The GDP growth, despite all assurances, has touched 4.5%, the lowest since the first quarter of FY13.

By the way, before you let that stat keep you from investing in stocks, you should know that last time GDP growth came so low, the Sensex and smallcap index saw some of the biggest gains in the upcoming months.

GDP Growth and Market Movement

GDP Growth and Market Movement

Will the history repeat this time?

To be honest, I'm not sure about the Sensex. I can't explain the Sensex's rise despite no strong show at the earnings level. But I know that people are scared and they are willing to compromise on the returns for the promise of safety. That explains the divergence between the performance of smallcap index and Sensex in last one and a half year.

Which brings me to a great investing opportunity in the smallcap stocks.

It has nothing to do with projecting historical trends. Or taking a broad -based view of the markets. Or speculating where the money will flow next.

It's based on a simple fundamental logic, which I believe will influence the long-term trends in the markets.

As I have shared before, the markets move on two factors - supply of capital and fundamentals.

The supply of capital can be erratic in the short term... like it is now... moving from small and mid-caps to large caps, especially Sensex stocks, irrespective of the earnings trend or growth potential.

To recap...

At the end of March 2019, almost 74% of the market cap was concentrated in top 100 companies qualified as large caps... This is up from 67%. On the other hand, the smallcaps contribution to overall market cap had fallen from 16% to 10%. The institutional money in smallcaps has declined from Rs 4.4 trillion to Rs 2.8 trillion, down 36%. The entire smallcap space commands just 5.1% share of institutional money.

But what about fundamentals?

--- Advertisement ---
New FREE Guide: Find the Next Crorepati Stock in this Futuristic Industry

Tanushree Banerjee, the co-head of research, just released her new guide:

Find the Next Crorepati Stock in this Futuristic Industry

And she has agreed to make it available for free for a limited time.

If you've not claimed your free copy, then do so now. It might not remain free for long. One more thing…

Tanushree has also discovered one stock from this futuristic industry… which she strongly believes has the potential to make you a crore or more.

She'll reveal more details about this stock in her first-ever 'One Stock Crorepati MEGA Summit'

We expect this to a huge event… with more than 10,000 people attending it LIVE.

You simply can't miss it.

Click Here to Download the Guide & Block Your Seat Now. It's Free.

While last few years have not been encouraging for the corporate earnings across the market caps, it wouldn't be fair to paint all stocks with the same brush.

Under my coverage, there are nine smallcap stocks in Hidden Treasure that have grown earnings since FY18 despite a lackluster and uncertain global and domestic macro-economic environment, and that one could consider buying within the maximum buy price levels.

You see, amid all the fear, there has been a correction in their stock prices despite the growth. And this offers a great rebound opportunity in them but you must act soon! Smallcaps are notorious for moving fast.

Wondering where to start? I recommend you begin with my top stock pick for 2020.

Warm regards,

Richa Agarwal
Richa Agarwal
Editor, Hidden Treasure
Equitymaster Agora Research Private Limited (Research Analyst)

PS: Dear reader, to know all about my #1 small-cap stock pick for 2020 please click here.

Recent Articles

This Hidden Bear Market is a Profit Hunter's Paradise December 12, 2019
Many stocks are quite low in the current market and these stocks can offer you big gains.
The World's Greatest Investor Would Buy These Stocks...What about You? December 11, 2019
The kind of stocks which gave Warren Buffett his initial lucky break.
The World's Richest Man Believes in this Ratio. Are You Using It? December 10, 2019
How I am using this ultimate financial measure favored by the world's richest man to stay ahead of the game.
Do You Want to Live Rich Like an Arab Sheikh? December 6, 2019
Our first Fast Profits Report recommendation is out. Read this to know about it.

Equitymaster requests your view! Post a comment on "Make the Most of the Smallcap Rebound with These Stocks". Click here!