Shah recommends looking at ancillary pharmaceutical names such as hospitals or pathology names.
Shares of midcap companies have been under pressure this year, with sectoral indices down around 12-15 percent. The moot question remains whether there is more pain left in the sector.
Experts believe there could be further downside in this space and a bottoming out is likely in quality names only after 30-40 days. “There has been a fair amount of immature or uninformed money, which has gone into many such stocks in the chase to garner better returns. Hence, selling is continuing in these cases,” Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company (AMC) told CNBC-TV18.
He added that the correction could happen till the point they are at par with fundamentals. “They still have to correct further to be at par with fundamentals.”
He advises investors to look at quality names, cautioning ‘one must also not rush to catch a falling knife’.
Speaking on a wealth-creators such as Infosys, which completes 25 years since its listing, Shah said it can still continue to be a part of one’s portfolio. However, he was quick to add that investors should not expect returns like it did in the past several years. “It is like the case of a test cricketer. At the age of 20, there is huge scope for improvement, but at 35, their future may be limited. But that does not imply that the player has no value. Can Infosys be a part of your portfolio and be like MS Dhoni? The answer is yes.”
He attributed the uptick in the pharma space to positive regulatory developments. “In such cases, expectations were muted, and when any set of positives take place, along with reasonable valuations, the scrips start to bounce back.”Shah recommends looking at ancillary pharmaceutical names such as hospitals or pathology names. “These could be a part of the portfolio,” he added.