For risk takers: 6 smallcap stocks from different sectors with upside potential of up to 46%

As Nifty comes closer to form a new high, more small cap stocks are joining the party. Right from a power and a diagnostic major to an engineering company are coming on the list. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

Once again the US banks are at the center of a storm in equity markets. In such times, a few mid-cap stocks have been able to keep their head above water. They have been able to rise marginally in a market where the majority of stocks have been coming under pressure. Which makes it worthwhile to have a look at them. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

These large cap companies have shown an improvement in their SR score at a time when bears are ruling the street. All thanks to global developments, market breadth and all other market parameters have moved back into the correction zone. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists down stocks which fulfill the various criteria as specified into the algorithms & filters.

Even as the stock market corrects, small and midcap stocks are refusing to leave the party. On a number of days the breadth of the small cap segment is better than large caps. Coming on the list are stocks from infrastructure, FMCG and home appliances space. All of them have beaten the bearish phase of the last one month with a positive return in the last month. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

In a period where small-cap stocks underperformed significantly, leading to a situation where large investors were calculating their losses in their small-cap holdings, there would be a group of steadfast enthusiasts who continue to see potential in small caps. Investing in these stocks, even amidst turmoil, can be sensible for those prepared to maintain their investment for three to five years. However, it's crucial to recognize the distinction between high-quality and poor-quality businesses across the small, mid, and large-cap spectrums, as well as the difference between the intrinsic value of a stock and the overall value of the company. Certain niche small businesses may still generate significant returns over time if they are held long enough. On the other hand, if one's approach to small-cap investments is merely based on the absolute value of a stock with hopes of a tenfold increase, then it's a misconception. Stock market investing, whether in small, mid, or large caps, should not be driven by unrealistic expectations; otherwise, it leads to nothing but undue stress, rather than substantial returns.

After refusing to leave the party when nifty and senex corrected for the last two months, small cap stocks witnessed correction in the last three weeks. One trend which has appeared is that on the day when the small index is down, the breadth of the whole segment is extremely weak. It is an indication that investors should put more checks and balances while navigating the small cap space. Also beware of rude shocks which this segment of the market may witness given the fact there are more headwinds ahead.ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

The gap between largecaps and small and mid cap indices is widening, but no structural breakdown has occurred. IT stocks, except for TCS, are in a downtrend. Tata Steel shares hit fresh 52-week highs. A largecap route is a more broad based one, while smaller cap approach is often in search of superlative returns, and provides a larger universe to pick. This advantage stays with the smaller market capitalized segment.

These small cap companies have shown positive returns in the last one year at a time when small caps were under pressure as stock markets have been overwhelmed by headwinds. ET screener powered by Refinitiv’s Stock Report Plus lists down stocks with high upside potential over the next 12 months, having an average recommendation of “buy” or strong buy .