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Showing posts from December, 2013

Under The Radar: India’s Small-Cap Equities (Part Three)

In February of this year, we summarised the valuation parameters of the BSE Small-cap Index in India (now the S&P BSE Small Cap Index) - following on from an earlier report we wrote in December, 2011 - and drew certain conclusions.
We would like to update the valuation scenario with the data today, review those conclusions, and form new ones based on the available information.
The small-cap index closed today (17th December, 2013) at 6,150.65 with an indicated price to book value of 1.04.
The closing value as on February, 2013 was 7,006.73 representing a decline of over 12% as of today.
The current index value masks a greater fall of over 27% to a low of 5,085.56 in August, 2013.
This represents an unsatisfactory overall performance for those who invested in small caps at the beginning of the year.
In our earlier report, we made two assumptions towards the end of our report to form a conclusion as to prices then:       1)“The market has a tendency to over-react to negative news”:  The m…