Buy largecaps, midcaps on dips; sell on every rise: Experts

Excerpts from Closing Bell on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

It was a day of stark contrasts on Dalal Street. The frontline indices faced substantial selling pressure and continued to slide lower, while broader indices were in an orbit of their own, clocking stupendous gains The Nifty closed at 4,270, down 48 points, while the Sensex shut shop at 14,060, down 241 points.

Also see: Benchmark indices end lower but midcaps, smallcaps up 6-9%

Deven Choksey of KR Choksey Securities sees the Nifty trading between 4,150 and 4,500 in the short-term.

Anu Jain, Vice-President - IIFL Private Wealth Management, India Infoline, said the Nifty needs to consolidate at current levels.  "The last 200 point consolidation on the Nifty happened between 3400 and 3600. Post that, it rallied further on. This is the same phase which is coming again."

Speaking on the rally in midcaps, Choksey said topline stocks have started becoming expensive and valuations are getting stretched, so investors have started catching up with some of the neglected midcap stocks at this point in time.

However, he was quick to caution that investors may fall into a trap because in many midcap stocks, fundamentals are not supporting these companies immediately. "It might take at least six-nine months before we could see the first results coming out from some of these companies. Some midcaps would be moving up and may discount the future in advance. That is where some investors may lose out on money."

Choksey advises investors to retain at least 70% portfolio and book profits in around 25-30% of the portfolio when the markets are rallying on the upside. "Investors should buy on dips and sell on rises. One will have to continue this activity for 25-30% part of the portfolio." Investors need not rush to make fresh investments in markets, he added.

Jain too advises investors to buy largecaps and midcaps on dips.