Mid-caps and small-caps are the most beaten down and if we are to take the year into account, an aggressive call at this point would be like catching a falling knife, Mustafa Nadeem, CEO, Epic Research said in an exclusive interview to Moneycontrol's Sunil Shankar Matkar.
Q. What are your market expectations from Diwali 2019 to Diwali 2020?
A. We believe that in the coming year there may be sideways consolidation in the market which may be in a broader range of 12,000-10,200. At this point in time, we have seen muted Q1FY20 and going forward we believe there would be underperformance from most of the companies in Q2FY20. We may see some momentum picked up post Q3.
We believe the performance is very much concentrated for now with only a few stocks that are aiding the breadth and have the momentum. There is a divergence in the benchmark and the broader index. It may, however, take a few months for that to revive, and till we see actual effects of 135 bps repo rate cut being passed on to the end consumer.
The upside for the Indian Equity market benchmark index, Nifty, is open to 12,600-12,700 in the next one year.
Q. Will it be a strong period for the market considering several measures taken by the market to boost the economy and what returns do you expect in the same period?
A. Yes, we may see the effects of various measures taken by the government in the coming months but we do not believe it to be a very strong period. Investors and markets have seen a lot in the last few months as companies that even had an iota of an issue on compliance or regulatory part were seen hammered from three to single digits.
So here we believe it will totally be a value play. We will be seeing stocks be it large-cap or mid/small-cap performing but there has to be a decent track record. We believe the returns should be double-digit.
Q. There are several measures which are taken by the government and they will have their impact in the long term but will midcap-small caps outperform large-caps after underperformance since 2018?
A. Mid-caps and small-caps are the most beaten down and taking an aggressive call at this point in time would be catching a falling knife if we are to take a year into account. So if we take a view for the next three to four years then yes the levels for long term accumulation are very attractive for smallcap and midcap companies. They tend to outperform in the longer-term horizon.
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