Keerthi Sanagasetti
BL Research Bureau |
Updated on
April 03, 2021
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12% chance of one becoming big in 10 years; 55% don’t beat Sensex’s 9.8% CAGR
Rookie and so called high-risk investors often buy small-cap stocks, betting on their potential to become tomorrow’s large caps. But there is only a small possibility of this happening, going by their performance in the last decade. A check of the top 250 small-cap stocks by market capitalisation as on March 31, 2011 shows that in the last ten years, only three have moved to the large-cap bucket.
That is, barely a 1 per cent chance! Not just that, many small-caps also lost the battle in terms of alpha generation the very reason that one invests in these stocks. The returns (CAGR) generated by half the small-cap companies could not beat the Sensex’s 10 per cent returns (CAGR) in the last ten years.
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Benchmark NSE Nifty index was trading 14.35 points up at 14924.80 on Wednesday on account of buying in frontline bluechip counters.
Among the stocks that touched their 52-week highs on NSE were: Adani Power, Adani Total Gas, Firstsource Solutions, IIFL Finance, KEI Industries, MindTree, NRB Industrial Bearings, Pritish Nandy Communications, Sundram Fasteners, Vedanta and PTC India.
Overall, 17 shares were trading in green in Nifty50 index, while 33 were trading in red in the afternoon trade.
In the Nifty 50 index, ITC, HDFC Bank, TCS, Tech Mahindra and HDFC were among top gainers, while BPCL, Coal India Ltd, ONGC, NTPC and GAIL were trading in red.