The bulls on Dalal Street have been on a rampage: Benchmark indices hit fresh highs and the recent macroeconomic indicators suggest domestic growth is holding up even though the world economy is struggling. Many see this as the start of a multi-year bull-run. Some are cautious of the lurking dangers and have fastened their seat belts. But all are optimistic and quite confident of India’s long-term growth potential and superior market returns in the coming years.
Confoundingly, unlike most bull-runs in the past, the current rally in stock prices is not being driven by the large-cap stocks. Consider this: The top 10 Nifty 50 stocks contributed 41 percent of the index returns in the past three months. While Nifty 50 stocks returned 21.6 percent over a one-year period, Nifty Smallcap 250 rose over 30 percent during the same period (see table).