Smallcaps have underperformed Nifty to the extent of 50% and midcaps to the tune of 35% since January 2018. Now as market participation widens, the catch-up trade has been more of a bottom-up trade, unlike in 2017, when the lowest quality stocks multiplied in a short period. This time, it's a stock pickers' market where companies with no corporate governance issues, good balance sheets and healthy earnings growth are taking away the rewards disproportionately. It's no longer a market that is ready to deliver a linear return every month.
STREET PULSE: Where we stand Nifty futures on Singapore Exchange traded nearly 10 points lower at 7 am (IST), signalling a tepid start to trade on Dalal Street. Stocks in Asia were mixed in the wake of the signing of the US-China trade deal.
HERE'S WHAT TO WATCH  | Shares in Japan and South Korea were largely flat, while Australian equities were modestly higher. Hong Kong and Shanghai saw a muted open. |
| Overnight, US equity indices hit new highs on the trade deal, with the Dow closing above 29,000 for the first time. The S&P500 closed at a new high, gaining 0.2% to 3,289, while Nasdaq held steady at 9,258. |
| Oil prices rose, propelled higher by the long-anticipated signing of an initial trade deal between Washington and Beijing that sets the stage for a potentially huge increase in energy supplies from the US to China. Brent gained 33 cents, or 0.5%, to $64.33 a barrel while WTI crude rose by 28 cents to $58.09 |
| The rupee on Wednesday found its winning ways after a day's hiatus, settling 5 paise higher at 70.82 to the US dollar as easing crude oil prices and weaker greenback lifted sentiment in the domestic forex market. |
| LOOK WHO'S |  |
LTCG Relief Coming… The government has approached tax advisers and experts on the possible implications of removing the tax on LTCG introduced amid much criticism in the FY19 Budget. Tax advisers say the government officials are considering options to attract more foreign long-term investment and one proposal is to do away with LTCG tax on listed equities. The government may also tweak the definition of 'long term' from a year to two years. Currently, 10% tax is levied on LTCG.
Read More Hedged Trades to Cost Less?.. The cost of hedged trades will soon dip in the Indian stock derivatives market. Traders using a combination of equity futures and options to create strategies that would result in limited losses could see margins for such bets decline significantly with Sebi expected to cut margin requirements for 'hedged positions'. This could lead to the cost of such trades coming down by 60-70%. The Options segment contributed 92% to the average daily turnover of Rs 16 lakh crore in the equity derivatives segment in January.
Read More Bezos' India Bets… Jeff Bezos said Amazon will invest another $1 billion in India to help 10 million Indian small and medium businesses (SMBs) sell online amid nationwide protests by neighbourhood shopkeepers against his visit to the country and the competition watchdog ordering a probe into ecommerce platforms. Amazon, which has invested more than $5 billion in India since 2013, said its latest programme will help SMBs participate in India's rapidly growing ecommerce and that it hopes to export locally made goods worth $10 billion from the country by 2025.
Read More | WHO'S |  |
A Deal That Didn't Excite… The US and China signed an initial trade deal on Wednesday that will roll back some tariffs and boost Chinese purchases of US products, defusing an 18-month row between the world's two largest economies, but leaving a number of sore spots unresolved. There was skepticism the US-China trade relationship was now firmly on the mend. The deal fails to address structural economic issues that led to the trade conflict, does not fully eliminate the tariffs that have slowed the global economy, and sets hard-to-achieve purchase targets, analysts said.
Read More More Job Cuts... Job cuts at Oyo, across multiple roles and business functions, are likely to intensify, said senior company executives, as the SoftBank-backed hotel chain struggles to rein in costs and shore up bottom line. The magnitude of the layoffs may be "far larger" than expected, they said on the condition of anonymity. A significant chunk of the 12,000-strong workforce at the Gurgaon-headquartered company is likely to be impacted by the aggressive retrenchment move, they said.
Read More Meanwhile... Budget Booster Coming for Phonemakers… The government could unveil a Rs 36,000 crore fund to provide production-linked incentives to smartphone makers to wean high-end electronic manufacturing away from China and Vietnam to India in the upcoming Budget. While this is aimed at attracting global supply chain companies such as Apple and Samsung to make India their manufacturing and export base, some other incentives like credit guarantee schemes and interest subvention schemes are being designed to help local phone makers.
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