As we inch towards the close of September quarter and begin the journey into the December quarter (October 1-December 31), the action on D-Street is likely to be more stock-specific rather than index-specific.
The Nifty has risen over 7 percent, or by about 800 points, so far in the September quarter which will end on September 30. Most experts feel that index is likely to consolidate but there will be plenty of action among the stocks.
Anecdotal evidence suggests that there are many stocks which have given a minimum of 20 percent return in the December quarter of last 4 calendar years.
As many as 22 stocks have given 20-480% return in December quarter consistently for the past 4 years including Keltech Energies, Ruchira Papers, Star Paper, Yuken India, Sat Industries, Tera Software, and White Organic Agro.
Most of the stocks which have given stellar returns in the December quarter for the last four years are from the small & midcap space.
Even though valuations are looking stretched at current levels, experts feel that if investors want to generate alpha then there is no better place to park your funds than in small & midcap space.
But, not every stock in the small & midcap space is a buy. Investors should do their own research before putting money into stocks. The idea is to remain focused on quality and not historical performance.
“Considering the peak valuations, a correction is expected. However, it is difficult to predict the time of its onset. Mid-and-small-cap companies will keep throwing up surprises in stock moves, based on their small size/base, faster adjustment to emerging changes, financial and operational restructuring, corporate announcements including mergers, demergers, hive-offs, turnaround, asset value unlocking etc.,” Deepak Jasani, Head – Retail Research at HDFC Securities told Moneycontrol.
“This space will give investors alpha at a time when the large-cap funds have found it difficult to replicate returns of their benchmark indices. Focus on companies that have the capability to sail through their business cycles without being affected by short-term market volatility,” he said.
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