The great smids rally: Who’s at risk?
₹5.5 trillion. But this hasn’t bothered Rohit Verma, a tech professional in his mid-50s with a big consulting firm, much. “A 10% plus correction after such a stupendous rally in Smids isn’t abnormal.
But I believe the structural story in areas like renewables is intact," Verma said. A retail investor, who like most of his ilk hunts for eye-popping returns in the Smids space, Verma lapped up Inox Green Energy Services and KPI Green Energy sometime in April this year, when the current rally gathered pace. Since April, the Inox Green share has delivered an 85% return while KPI Green returned 60%.
Inox Green is a wind power operation and maintenance services company. KPI Green Energy is a solar power producer. Verma doesn’t plan to offload his shares yet, but won’t add more.
“For me, the alarm bells will ring only if there is across-the-board selling, an election upset, or if corporate governance issues crop up in a particular stock I hold, and I don’t envisage such events," he said. By elections, he means India’s general election, expected to be held between April and May next year. Many believe that a pre-election market rally is already under way.
However, a disappointing election outcome can play havoc. Many mature retail investors, like Verma, understand that. Recently, global brokerage firm Morgan Stanley stated the same.
Morgan Stanley’s base case is for the National Democratic Alliance (NDA), led by the Bharatiya Janata Party (BJP), to win the 2024 general elections. It believes that the markets have priced in the BJP winning 260 plus seats. If this indeed happens, the Sensex could rise by 5% in three months after the elections.
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