Bull market creates 91 new large-cap stocks

MUMBAI: What now, after Sensex 10,000? Can a rally driven largely by foreign institutional investors really sustain itself when all large-cap Sensex stocks are substantially overowned by them?

The answer is simple: there’s more of them large-caps to choose from now. In the last 12 months,  the bull run has created no less than 91 new large-cap stocks and 166 new mid-caps, giving FIIs (and other big investors) a wider list of companies to invest in.

According to a study by DNA Money, between February 7, 2005, and February 6, 2006, when the BSE Sensex jumped 53%, some 266 companies saw their market-cap status undergoing a dramatic metamorphosis.

Soaring share prices pushed 166 small-cap companies - those with market-caps below Rs 250 crore - into the mid-cap league. And 91 mid-cap companies became large-cap ones (market-cap above Rs 1,000 crore).

In the case of some of the companies, the leap was not just from the rung below to the one above. Nine companies pole-vaulted directly from the small-cap club to large-cap.

Mahindra Gesco was among the nine big leapers. Once a mean cat, this company’s market-cap surged from Rs 197.20 crore to Rs 1,240 crore during the period as its share jumped 529% from Rs 63.55 to Rs 399.75.

Anant Raj Industries, a Haryana-based manufacturer of ceramic tiles, was among the small-cap companies that became large-cap firms.

Its share prices surged a whopping 5,164% (52 times) - from Rs 9.10 to Rs 479.10 in the last one year. As a result, the company’s market capitalisation soared from Rs 17.55 crore to Rs 1,044 crore.

Likewise, the market capitalisation of BF Utilities saw a rise from Rs 229 crore to Rs 2,872 crore, after its stock price rose 1,154% from Rs 60.80 to Rs 762.40.

The other six small-cap companies that transformed into large-cap ones were Adlabs Films, Bajaj Auto Finance, Kalpataru Power, Shree Precoated Steels, Simplex Infrastructures and SIC Agencies.

Let’s now look at the performance of some individual companies.

The notable companies that turned from mid-cap to large-cap ones were Financial Technologies, Indiabulls Financial, Nagarjuna Constructions, Titan Industries, McDowell & Company, Max India, Hotel Leela Ventures, Patel Engineering and IVRCL Infrastructures.

Among the companies that moved up from small-cap to mid-cap were Madhucon Projects, Phoenix Mills, Reliance Industrial Infrastructure, JM Financial, Praj Industries and Sakthi Sugars.

Textiles and construction companies had a large share in this jump: 11 small-cap and five mid-cap textile companies and 15 small-cap and 2 mid-cap construction companies transited from one state to another during the last one year. IT contributed 14 companies, sugar and steel 11 each.