It’s not all over in mid and small caps, watch out for quality names: Experts
Having said that, it is not all over in these segments as quality names will still assure steady returns for an investor, several market voices have said.
June 29, 2018 / 08:04 AM IST
Mid- and smallcap stocks have had a weak run so far this year against the stupendous (almost 50 percent) rise see in 2014. In 2018, both mid and smallcap indices have lost around 20 percent. Experts have cited expensive valuations as one of the major reasons behind this fall.
Several market voices say it is not over yet in these segments as quality names will still offer steady returns to an investor.
Nilesh Shah, Managing Director with Kotak Mahindra Asset Management Company (AMC), is hoping for a recovery midcaps ahead. “Quality midcaps will start bottoming out over the next 60 days.” In an interview to CNBC-TV18, he cites the sharp run-up in mid and smallcaps that pushed up valuations ahead of fundamentals.
Shah also recommends avoiding momentum-driven stocks in the mid and smallcaps space at this point.
However, Hiren Ved, Director and CIO, Alchemy Capital, is planning to cash in on the situation and deploy more funds to build their positions. “We are not seeing significant redemptions so far, in fact we are seeing some inflows. We will be looking to unleash equal funds in large and midcaps space.”
In midcap mutual funds, there has not been a lot of redemption pressure, though the flow trends for the entire mutual funds space has seen some slowdown, says Anand Shah, Deputy CEO and Head of Investments at BNP Paribas Mutual Fund. “There is some traction seen in largecaps and midcaps on the earnings front and there are many companies that are looking attractive from growth and earnings perspective.”